Original Cost of Asset This is the cost of the asset. It is also known as historical cost. It includes : Example – Below cost details are with regard to purchase of a machinery : Note : Any refundable taxes are not included in the cost Estimated Residual Value or Scrap value Amount estimated to […]
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Topic Link Level Meaning and Characteristics Click Here Basic Objectives of providing depreciation Click Here Basic Factors in depreciation calculation Click Here Basic Methods of recording depreciation Click Here Basic Asset Disposal Account Click Here Basic
Show true and fair view of financial statements Financial Statements are made on historical cost basis. It means that the transactions are recorded in books of accounts at purchase price. In case of assets however the value of assets is reduced due to usage or passage of time continuously. So it is right to reduce
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Depreciation is the reduction in the value of an asset due to : Depreciation can be used both in the practical sense and in accounting sense. In practical sense the reduction happens in the market value of an asset you own like mobile phone, laptop, car, furniture, washing machine, TV, etc. whose value reduces as
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