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Is it necessary to provide depreciation in the business running in loses?
Wiki User
∙ 12y ago
it is necessary to provide depreciation even business is running in loses or in profit
because depreciation provides fund for future and remove the burden of fund for purchasing new machinery when old machinery are broken down.
Wiki User
∙ 12y ago
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If the business is running into losses should we provide depriciation?
As long as the company has Fixed Assets it is prudent for the company to provide depreciation. It not only helps in Tax sops but also disguises the real loss. I'm not an accountant by training, so others jump in. Regardless of your status, red or black, ALWAYS declare depreciation and related carrying costs. These are deductible from your gross tax burden. A figure of 1/3rd fair market value per fiscal year is usually saleable, particularly in times of economic stress. But I guarantee I'll get jumped on for this by the greater informed. Provide for depreciation in your books, but do not provide it to any potential buyers.
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