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Depreciation is a period cost and not a product cost as depreciation is still charged even if there is no production or sale of goods.
In determining the period of depreciation to be charged, one must consider the cost of the asset and its estimated salvage value. The usual life of the asset must also be considered together with its obsolescence.
Depreciation of administrative equipment is period cost because if production is done or not those assets will be depreciated hence cost will be charged as period cost.
Loss by theft will be charged to profit and loss account for that specific fiscal year with the remaining amount after accumulated depreciation till that time period.
Depreciation expense on the income statement represents the portion of the asset's cost that is allocated as an expense during the reporting period. Accumulated depreciation on the balance sheet is a contra-asset account that reduces the asset's original cost by the total amount of depreciation expense recognized over its useful life. Thus, depreciation expense increases the accumulated depreciation balance on the balance sheet.
Depreciation on Capital Expenditure is nothing but Depreciation on fixed assets. Cash Flow statement shows the Capex incurred during the particular time period,i.e. for Quarter or fiscal year. A CAPEX is an amount spent to acquire or improve a long term asset such as plant,equipment or buildings. Usually the cost is recorded in an account classified as Property,plant and equipment.The cost (Except for the cost of LAND) will then be charged to depreciation expense over the useful life of the asset.
straight line depreciation
Please note that in order to charge depreciation, we must know the expected life of the subject so as to distribute the cost of the stock over that period. However, in case of livestock, the life can't be ascertained i.e. the very basis of calculation ofdepreciation is not available and this must be one of the reasons for not charging depreciation on livestock.
Idle asset is that asset which is not utilized in the fiscal year to earn revenue of business. Depreciation of idle asset is not charged for that specific period under which it remained idle.
The accountant calculated the depreciation of the computer over a period of five years.
Yes depreciation of delivery truck is period cost because it is not product cost as it is not require to make the units of product.
as per accounting standards issued by icai depreciation can be charged by following two methods 1)straight line method 2)written down value method but as per income tax act depreciation is allowed by way of wdv method.