Why cash is not depreciable although
Atharv Sankliya (1354 Points)
05 May 2022
why cash is not depreciable although its value decrease due to inflation
5 Replies
Eswar Reddy S
(CFO- at NHTF)
(58270 Points)
Replied 05 May 2022
Depreciation is mainly considered to give effect of wear and tear . Asset will be used for business purposes and it may generate revenue.
Where as Cash once expended it has no value.
Depreciation is not applicable to cash since it is not part of PPE .
If you have 10000/- today in bank account then it will remain 10000/- . So the value may not reduce .
But if you buy asset today and the value may not be same after one year due to use of asset.
Hope you got the answer
Where as Cash once expended it has no value.
Depreciation is not applicable to cash since it is not part of PPE .
If you have 10000/- today in bank account then it will remain 10000/- . So the value may not reduce .
But if you buy asset today and the value may not be same after one year due to use of asset.
Hope you got the answer
Eswar Reddy S
(CFO- at NHTF)
(58270 Points)
Replied 06 May 2022
Inflation is taken care by bank interest
Atharv Sankliya
(1354 Points)
Replied 06 May 2022
Means if we save cash in hand without any interest than it will depreciable ?? if yes does we have to depreciate it in balance sheet ??
Eswar Reddy S
(CFO- at NHTF)
(58270 Points)
Replied 06 May 2022
But there is no compulsion to maintain huge cash balance .
Cash will not depreciate ..First you need to check whether it meets the definition of fixed asset or PPE to account depreciation.
You can not account depreciation on Cash & Cash equivalents
Cash will not depreciate ..First you need to check whether it meets the definition of fixed asset or PPE to account depreciation.
You can not account depreciation on Cash & Cash equivalents
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