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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.
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Provision for depreciation is equal to accumulated depreciation?
yes
What is provision for depreciation and how do you treat it in accounts?
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.
What is provision of depreciation?
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.
Is provision for depreciation is current liability?
NO, it is not a liability it is a con-tra account
Should Provision for depreciation comes under current liabilities?
All provisions comes under current liabilities so provision for depreciation is as well because it is made for one fiscal year only.
Provision for depreciation is equal to accumulated depreciation?
yes
Do you credit provision depreciation and debit accumulated depreciation?
yes
What is provision for depreciation and how do you treat it in accounts?
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.
What is provision of depreciation?
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.
Is balance of provision for depreciation account is shown on the trial balance as debit?
no, provision of depreciation iscredit in nature. And thus it should be shown at the credit side at trial balance.
Is provision for depreciation is current liability?
NO, it is not a liability it is a con-tra account
Should Provision for depreciation comes under current liabilities?
All provisions comes under current liabilities so provision for depreciation is as well because it is made for one fiscal year only.
What are the examples of contra account?
Examples of Contra Accounts are Accumulated Depreciation and Provision for Doubtful Debts
What is profit before depreciation?
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.
What are the effect of depreciation on profit and loss and balance sheet?
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.
Difference between provision for bad debt and reserve for bad debt?
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.
What is the benefit of taxes when calculating depreciation into a cash flow projection?
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.
