Disposal of asset

can you please solve this question and tell what is mean when they say " no depreciation is charged on the asset in the year of sale"?

asked Jan 1, 2016 in Depreciation, Provisions and Reserves. by Feba Rajeev (67 points) 109 views

1 Answer

0 votes
This simply means that no entry for depreciation with be passed in the year in which the asset is sold.  For example a five year old machine you sell in 2015.  Up to 2014 you have charged depreciation on that machine but in 2015 you will not charge any depreciation on that machine irrespective of the month in which you are selling that machine.
answered Jan 1, 2016 by jbsclasses (3,805 points)
Ok. But if they say only a part of the machinery was sold, do we calculate depreciation for the machinery which was not sold??
Yes, depreciation will be charged on unsold machinery.
Ok. Why do we maintain both the depreciation and provision for depreciation account?
Dear Rajeev, I am giving below a link where the whole concept of mainintaining Provision for Depreciation A/c is explained.  You just please go through that and after that you may clear your doubts, if any.