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Why depreciation is charged in P&L Account?
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Answer Posted / rajesh
depreciation is to be privided by the company for using the
fixed assets. the concept fixed will be retained by the
company for manufacturing goods and prividing servies for a
period more than one year. during the usage it lost its
value in the form of wear and tear efflux of time and
technical changes and latest tech development in mfg
process. once the life is over it has to be replaced by
other equipment. the basic concept is business entity
concept that the business will be carried over more than
one year. for that purpose we are charging to p&l acccount.
by charging that amount treated it as exp.with out
incurring exp we are charging thaqt means the company
holding money in the form of cash. and for purchasing new
eqipment
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