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(Querist)
01 January 2011 How does dep create funds for replacement of assets?

If one say that by creating accumulated depreciation account funds are created, i do not understand this logic.

By charging dep we may restricting some amount to be distributed as dividend but how are we creating cash for replacement of assets.
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CA Shailesh Kumar Bhagat

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CA Shailesh Kumar Bhagat (Expert)
02 January 2011 booking the expenditure without making a payment. You can realease this fund for replacing of assets.
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Vaibhav

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Vaibhav (Querist)
03 January 2011 But we have already paid for the original asset purchased, is it not just the booking of original payment.
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