Provision of depreciation account is the account of provision of depreciation.
First of all we should understand provision of depreciation .Provision of depreciation is the collected value of all depreciation. With making of this account we are not credited depreciation in asset account. But transfer every year depreciation to provision of depreciation account. Every year we adopt this procedure and when assets are sold we will transfer sold assets 'total depreciation to credit side of asset account. For calculating correct profit or loss on fixed asset. This provision uses with any method of calculating depreciation.
yes
A provision of depreciation account is different than other accounts because it collects all of the value of depreciation within the account. In the main asset account, depreciation is not credited because it is credited into this account.
Provision of depreciation is allowance account in which every year fixed amount is put to charged against actual depreciation so that planned income statement can be prepared and profit remains smooth.
NO, it is not a liability it is a con-tra account
All provisions comes under current liabilities so provision for depreciation is as well because it is made for one fiscal year only.
yes
yes
A provision of depreciation account is different than other accounts because it collects all of the value of depreciation within the account. In the main asset account, depreciation is not credited because it is credited into this account.
Provision of depreciation is allowance account in which every year fixed amount is put to charged against actual depreciation so that planned income statement can be prepared and profit remains smooth.
no, provision of depreciation iscredit in nature. And thus it should be shown at the credit side at trial balance.
NO, it is not a liability it is a con-tra account
All provisions comes under current liabilities so provision for depreciation is as well because it is made for one fiscal year only.
Examples of Contra Accounts are Accumulated Depreciation and Provision for Doubtful Debts
The answer is in the question really. It's the profit a business makes before depreciation is charged. As depreciation is a non cash item it could be argued that it's the cash profit. However, there could be provision in there so calling it the cash profit is not strictly true.
Depreciation is an expense. It should be charged under expense of a P&L Statement. Provision for Depreciation is the total depreciation of a particular fixed asset accumulated over the years. It should be deducted from the figure of the Fixed asset.
Provisions and Reserves are the amount setaside out of profits. When the amount is set aside for a particular purpose it is called a provison. Examples for this is Provision for Baddebts and provision for Depreciation and Provision for Discounts on Debtors. when the amount is setaside for particular purpose is called a provision whereas Reserve is the amount setaside out of profit but not for particular purpose. In most cases provision is incorrectly described as Reserve. One cannot create Reserve for baddebts.
Depreciation itself does not affect cash flow. After all, depreciation is a noncash entry that reflects the reduction in value of a long-lived asset. It has no direct cash flow effects. However, because depreciation is tax-deductible, it can reduce a company's tax provision. Therefore, to the extent that depreciation reduces taxes, it provides a cash flow benefit. To compute the benefit in any given year, multiply the Modified Accelerated Cost Recovery System (MACRS) depreciation on the asset by the company's marginal tax rate.