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CPT Chapter Depreciation

CA CPT chapter on “Depreciation” explains the concept of depreciation, the various methods of charging depreciation (Straight Line Method, WDV Method etc) and their relative advantages and disadvantages. It also explains the accounting entries in case of a change in the method of depreciation.

CA CPT Exam  

With Sheela Warrier.Duration:3hrs 14min

Depreciation Duration (min:sec)
What is Depreciation?  
{modal;rel=0|width=780|height=439|title=Introduction}Introduction{/modal} 00:57
{modal;rel=0|width=780|height=439|title=Index}Index{/modal} 02:58
{modal;rel=0|width=780|height=439|title=What is Depreciation}What is Depreciation{/modal} 14:49
{modal;rel=0|width=780|height=439|title=Why do we Depreciate}Why do we Depreciate{/modal} 06:31
{modal;rel=0|width=780|height=439|title=When do we start depreciation}When do we start depreciation{/modal} 01:22
{modal;rel=0|width=780|height=439|title=Summary}Summary{/modal} 02:48
{modal;rel=0|width=780|height=439|title=Quiz}Quiz{/modal} 08:06
Measurement of Depreciation  
{modal;rel=0|width=780|height=439|title=Measurement of Depreciation}Measurement of Depreciation{/modal} 11:11
{modal;rel=0|width=780|height=439|title=Methods of Depreciation}Methods of Depreciation{/modal} 04:09
{modal;rel=0|width=780|height=439|title=Straight Line Method}Straight Line Method{/modal} 07:06
{modal;rel=0|width=780|height=439|title=Accounting Entry -Method 1}Accounting Entry -Method 1{/modal} 08:45
{modal;rel=0|width=780|height=439|title=Accounting Entry -Method 2}Accounting Entry -Method 2{/modal} 08:52
{modal;rel=0|width=780|height=439|title=WDV Method}WDV Method{/modal} 08:38
{modal;rel=0|width=780|height=439|title=Comparison between St line & WDV Method}Comparison between St line & WDV Method{/modal} 07:21
{modal;rel=0|width=780|height=439|title=Sum of Years digit method}Sum of Years digit method{/modal} 05:35
{modal;rel=0|width=780|height=439|title=Machine Hour Method}Machine Hour Method{/modal} 03:23
{modal;rel=0|width=780|height=439|title=Depletion Method}Depletion Method{/modal} 03:36
{modal;rel=0|width=780|height=439|title=Production Unit Method}Production Unit Method{/modal} 02:58
{modal;rel=0|width=780|height=439|title=Summary Method of Depreciation}Summary Method of Depreciation{/modal} 07:06
{modal;rel=0|width=780|height=439|title=Quiz}Quiz{/modal} 06:31
Related Topics  
{modal;rel=0|width=780|height=439|title=Introduction to Related Topics}Introduction to Related Topics{/modal} 01:25
{modal;rel=0|width=780|height=439|title=Change in Method of Dep}Change in Method of Dep{/modal} 11:49
{modal;rel=0|width=780|height=439|title=Revaluation of Asset}Revaluation of Asset{/modal} 07:33
{modal;rel=0|width=780|height=439|title=Revision of Estimates}Revision of Estimates{/modal} 05:23
{modal;rel=0|width=780|height=439|title=Prov for Repairs & Renewal}Prov for Repairs & Renewal{/modal} 02:57
{modal;rel=0|width=780|height=439|title=Summary Related Topics}Summary Related Topics{/modal} 05:25
{modal;rel=0|width=780|height=439|title=Quiz}Quiz{/modal} 18:17
{modal;rel=0|width=780|height=439|title=Additional Questions}Additional Questions{/modal} 10:32
{modal;rel=0|width=780|height=439|title=Conclusion}Conclusion{/modal} 08:41
Total 3:14:44


Few things covered by us

What is Depreciation?
Why Depreciation?
When ?
How is Depreciation Measured?
How is Depreciation Accounted for ?
Change in method
Revision of estimates
Revaluation of depreciable assets
Provision for repairs and renewals

Depreciable Assets

Expected to be used for more than one year
Has a limited useful life
Held for use in the business
Not meant for resale


Reduction in the value and utility of an asset
Matching concept


Funds for Replacement
True Profit
True Financial Position
True Cost of Production
Legal Requirement


Depreciation is charged from when the depreciable asset is:
In a condition ready to be used
Available for the purpose for which it is assigned

Factors for measuring depreciation

Cost of the asset: actual
Residual value: estimated
Useful life: estimated
Depreciable amount: computed

Methods of depreciation

Straight Line Method
Reducing Balance Method
Sum of Years Digits Method
Annuity Method
Sinking Fund Method
Machine Hour Method
Production Units Method
Depletion Method

Reducing Balance (WDV) Method

Fixed rate on written down value (WDV) of asset
Amount of depreciation reduces each year
Depreciation + Repairs is uniform every year
Applicable for Income Tax purposes also
Impact of obsolescence reduced

Change in method of depreciation

Change only if
Retrospective effect
Difference taken to Profit and Loss a/c

Revision of estimates

Estimated life
Estimated scrap value
Book value to be depreciated on the basis of new estimate

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