Answer / sajeermoidu

The cumulative depreciation of an asset up to a single
point in its life. Regardless of the method used to
calculate it, the depreciation of an asset during a single
period is added to the previous period’s accumulated
depreciation to get the current accumulated depreciation.

for example,we have an asset value of 20000,5yrs life time
so depreciation per year is: 4000

depreciation a/c DR......... 4000
to accumulated depreciation CR........4000

now 4000(depreciaton ) shown in the p&l a/c

20000 shown in the balace sheet as fixed asset

4000(accumulated depreciation ) shown in the liabilty side
of the balance sheet
now the net value of the asset is 16000(20000-4000)

what is the entry for accumulated depreciation?n why it is used?when it is necessary?

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