Answer / anudeep

depreciation can be treated as in two ways one is deducted
from asset and other one is shown as liabibility.
if depreciation is deducted from the concerned asset. then
the balance sheet value asset does not show original cost

the reason why depreciation is treated as depreciation
reserve is to show the asset in the balance sheet as cost
value i mean historical cost we hav to provide depreciation
reserve

any way whether we are deducted from asset or creation of
liability i mean dep reserve the motive of depreciation is
replacement of assets after certain period.

the jounal entry will be like this

depreciation A/c dr
to dep reserve a/c

for transfer to profit and loss account
profit and loss A/c dr
to depreciation account

Answer / sanjiv

Motive is to create reserve for replacememt in the event of
loss.

Depreciation Dr to Depreciation Reserve

Depreciation charged to P & L. Reserve is shown as
liability.

Answer / raghupathi vengala

It will be we frame for a estimation of future loss. And it
is a assumption. we create it for the future beefit.

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