Accounting Archives - COMMERCESTUDYGUIDE

When charging depreciation, whether for financial reporting or tax purposes, it’s essential to follow best practices to ensure accuracy, compliance, and transparency in your accounting practices. Here are some important “do’s” and “don’ts” to consider when dealing with depreciation: Do’s: Understand Depreciation Methods: Familiarize yourself with the various depreciation methods (e.g., Straight-Line, Diminishing Balance, Units of Production) and choose the Read More …

Reseasons for Charging Depriciation

December 23, 2023December 23, 2023 TORAN LAL VERMA

Charging depreciation is a crucial accounting practice that serves several essential purposes in financial reporting and decision-making for businesses and organizations. Below, we’ll delve into the reasons why it is important to charge depreciation: Matching Principle: Depreciation aligns with the accounting principle of matching expenses with revenues. When a business acquires an asset (e.g., machinery, buildings, vehicles), it incurs a Read More …

Straight-Line Method of Depriciation

December 23, 2023December 23, 2023 TORAN LAL VERMA

The Straight-Line Method of depreciation is one of the most straightforward and commonly used methods for allocating the cost of an asset over its useful life. In India, this method is widely employed for financial reporting and tax purposes. This approach assumes that an asset’s value decreases evenly over its useful life, resulting in a consistent depreciation expense each year. Read More …

Diminishing Balance Method of Depreciation

December 23, 2023December 23, 2023 TORAN LAL VERMA

The Diminishing Balance Method of depreciation, also known as the Declining Balance Method or Written Down Value (WDV) method, is one of the most commonly used depreciation methods in India. It recognizes that assets tend to lose their value more rapidly in the earlier years of their useful life and slower in the later years. This method reflects this pattern Read More …