Provision for depreciation account

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
What is the provision for depreciation account and why do we need one?? :?

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Provision for depreciation account

    Provision for depreciation A/c is an account for the depreciation to completed the double entry bookkeeping, and we need that account to know how far the fixed had been deducted (depreciation's story)
    The Depreciation a/c closed every accounting priod but the provision for depreciation is carried forward.
    Hope it help
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Provision for depreciation account

    so does that mean that if the first years depreciation charge is £20 then the provison for depreciation is £20.
    Then the next year will be another depreciation charge of £20 but the provison for depreciation is £40 (£20 first year and £20 second year)? So basically accumulated depreciation?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Provision for depreciation account

    Here we are I have found a definition, basically confirms what I said:

    "Provison for depreciation - the balance sheet account that records the accumulated depreciation to date on a fixed asset"
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Provision for depreciation account

    the Accumulated depreciation = Provision for depreciation nothing defferent just defferent book they use defferent term.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Provision for depreciation account

    Thank you, that is a great help
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Provision for depreciation account

    It helped me too! Made me think and I had to look it up

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