what is the difference between accumulated depreciation and provision for depreciation?? is it one and the same or there is some difference ???? plz clearify......
15 Replies
(Guest)
Hi Gaurav,
While recording depreciation @ provision for dep a/c may or may not be maintained. If the a/c is maintained then the assets appear at their original cost since the dep is credited to prov a/c instead of asset a/c.
Entry: Depreciation A/c Dr.
To Provision for depreciationa/c
On the other hand, The accumulated depreciation, is the actual depreciation, as measured by the actual loss in value of an item and represents the total, or accumulated loss of value of an item or a group of items, in that fiscal period.....
MITU....
(ARTICLE Assistant)
(210 Points)
Replied 24 November 2009
HEY FROM MY POINT OF VIW THEY BOTH R DIFFERENT
FIRSTLY ACCUMULATED DP WORD IS USED IN INCOME TAX AS IT IS DEP WHICH COULD NOT BE ADJUSTED BECOZ OF LOSSES.
SECONDLY PROVISION FOR DEP IS DONE IN ACCOUNTS WHICH SHOWS DEP TILL DATE PROVIDED ON THE ASSETS
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 24 November 2009
CA SUDIPTA SINHA
(Commerce Coaching- Accounts Cost FM)
(735 Points)
Replied 24 November 2009
accumulated depreciation and provision for depreciation both are same.....
CA.kaya
(Chartered accountant)
(3990 Points)
Replied 24 November 2009
poonum is correct.. provission for dep is charge against profit. i e we can claim depreciation as deduction from profit. but when we cant claim it ( during loss or insufficient profit ) then it get accounmulated and eligible for cliam as deduction from future year profits.
CA SUDIPTA SINHA
(Commerce Coaching- Accounts Cost FM)
(735 Points)
Replied 24 November 2009
| Originally posted by :Kaya | ||
| " | poonum is correct.. provission for dep is charge against profit. i e we can claim depreciation as deduction from profit. but when we cant claim it ( during loss or insufficient profit ) then it get accounmulated and eligible for cliam as deduction from future year profits. | " |
so far i know when depreciation can not be claimed as deduction due to loss or insufficient profit it is accumulated and called "unabsorbed depreciation" and carried forward to the next year.....the provision for depreciation and accumulated depreciation are same......
CA sandeep
(ca )
(48 Points)
Replied 25 November 2009
accumulated depreciation means total of the depreciation till date and provision for depreciation means depriciation for current year.
Narayanan.R
(Chartered Accountant)
(191 Points)
Replied 25 November 2009
Accumulated Depn and Provision for depn are different:
Accumulated depn account is maintained to show Original cost of fixed cost at historical cost value rather than adjusting the depreciation and showing at net book value.
Provision by its nature is a charge on profit. When the exact value of depreciation cannot be ascertained for eg. CWIP is going on then there can be provision for depreciation on the same before the asset is capitalized. In such cases this account is maintained.
Current year provision for depn will be added to Accumulated depn.
This is accounting perspective.
In taxation this will be different.
CA.kaya
(Chartered accountant)
(3990 Points)
Replied 26 November 2009
hey ya. i was wrong. accoumulated dep means total of dep till date. wat i told in previous post is unabsorbed dep...
Jag Bhushan Sharma
(Faculty in a B-School)
(633 Points)
Replied 30 November 2009
Actually both Provision for Depreciation and Accumulated depreciation are one and the same thing.
Entry for charging depreciation while maintaing Provision for Depreciation A/c is Depreciation A/c Dr. to Provision for Depreciation A/c. Later Depreciation A/c is debitedd to P/L A/c and Provision for depreciation A/c is shown as a Deduction from the historical cost of the Asset. Provision for Depreciation A/c keeps on accumulating the depreciation charged every year, hence this account is also called Accumulated Depreciation A/c.
(Guest)
| Originally posted by :Jag Bhushan Sharma | ||
| " | Actually both Provision for Depreciation and Accumulated depreciation are one and the same thing. Entry for charging depreciation while maintaing Provision for Depreciation A/c is Depreciation A/c Dr. to Provision for Depreciation A/c. Later Depreciation A/c is debitedd to P/L A/c and Provision for depreciation A/c is shown as a Deduction from the historical cost of the Asset. Provision for Depreciation A/c keeps on accumulating the depreciation charged every year, hence this account is also called Accumulated Depreciation A/c. |
" |
Thank u sir for clarifying. Yes both are same.
Shashi Bhushan
(Learner, Jalandhar)
(996 Points)
Replied 30 November 2009
| Originally posted by :MITESH | ||
| " | HEY FROM MY POINT OF VIW THEY BOTH R DIFFERENT FIRSTLY ACCUMULATED DP WORD IS USED IN INCOME TAX AS IT IS DEP WHICH COULD NOT BE ADJUSTED BECOZ OF LOSSES. SECONDLY PROVISION FOR DEP IS DONE IN ACCOUNTS WHICH SHOWS DEP TILL DATE PROVIDED ON THE ASSETS |
" |
Wrong and base less reply..
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