Why depreciation is charged in P&L Account?
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Answer Posted / krishnachaitanyanellore
Depreciation is the continuous decrease in the value of the
asset.Depreciation can be considered both as an expense and
as a source of revenue.
Expense:Because the value of the asset is decreased
resulting in some loss, it is posted in P&L account.
Source of revenue:Depreciation when posted on the debit side
of the P&L account, the profit is decreased. In other way,
the profits that should be distributed among the
shareholders gets decreased.It means that the residual is
placed in the business itself.
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