00:01
So we are going to understand the term depreciation and related concepts that how do we record the charging of depreciation expense.
00:22
It refers to the amount of expense, okay? it refers to the amount of expense that will be charged to income statement to reflect where and tier of asset on yearly basis.
01:30
So this definition shows that the depreciation is an amount which is charged to income and income statement to show that there is a yearly decrease in value of the asset if we will use the asset for our production capacity.
01:52
Let's suppose you have purchased the machinery on starting of your business.
01:56
Okay to produce furniture you know processed chair chairs and tables like that okay so if you have purchased machinery on 1st january 2019 then let's suppose you have purchased of thousand dollars so will that value remains same over the upcoming years no it will not remain same it will be decreasing okay the value will decrease why that so because it will be used accordingly to produce the furniture and related products.
02:41
So to record the depreciation, we have first method that we will do like this.
02:51
They will record two types of entries.
02:56
Deprivation account debit to asset account.
03:03
Okay...