Give the necessary journal entries when …
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Posted by Thiem Kipgen 3 years, 11 months ago
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Gaurav Seth 3 years, 11 months ago
Creating Provision for Depreciation Account− Under this method, depreciation is not credited to the Assets Account; in fact, it is credited to the provision for Depreciation Account. At the year end, asset is shown at the original cost in the Balance Sheet and total depreciation up to the date of Balance Sheet is shown as Provision for Depreciation Account.
Journal entries for depreciation are:
Charging Depreciation
Depreciation A/c
Dr.
To Provision for Depreciation A/c
(Depreciation charged)
Closing of Depreciation Account
Profit and Loss A/c
Dr.
To Depreciation A/c
(Depreciation account is transferred to Profit and Loss Account)
When the asset is sold, the accumulated depreciation on that asset is credited to the Asset Account by passing the following Journal entry:
Provision for Depreciation A/c
Dr.
To Asset A/c
(Accumulated depreciation transferred to Assets Account)
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