Journal Entries
1. At the time of Purchase of Fixed Assets:
2. At the End of Each Accounting Period:
(i) For the Depreciation charged on Fixed Assets:
(ii) For Transferring Amount of Depreciation to Profit & Loss A/c:
3. At the Time of Sale of Fixed Assets:
(i) For the Depreciation charged on Selling Assets (Up to the Date of Sale):
(ii) For the Sale of Fixed Assets:
(iii) For the Profit/Loss on Sale of Fixed Assets:
- For the Profit on Sale of Fixed Assets (If Sale Price is More than the Book Value):
- For the Loss on Sale of Fixed Assets (If Sale Price is Less than the Book Value):
Written Down Value (WDV) Method of Depreciation
Businesses choose different methods for calculating depreciation according to their need. One of the most prominent methods for calculating depreciation is the Written Down Value Method. Under this method of charging depreciation, the amount charged as depreciation for any asset is charged at a fixed rate, but on the reducing value of the asset every year. The amount of depreciation is deducted from the written down value (i.e., cost less depreciation) of an asset and charged on the debit side of the Profit and Loss A/c as a loss. The concerned asset is depreciated with an unequal amount every year, as the depreciation is charged to the book value and not to the cost of the asset.