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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

DepreciationDuration (min:sec)
What is Depreciation? 
What is Depreciation14:49
Why do we Depreciate06:31
When do we start depreciation01:22
Measurement of Depreciation 
Measurement of Depreciation11:11
Methods of Depreciation04:09
Straight Line Method07:06
Accounting Entry -Method 108:45
Accounting Entry -Method 208:52
WDV Method08:38
Comparison between St line & WDV Method07:21
Sum of Years digit method05:35
Machine Hour Method03:23
Depletion Method03:36
Production Unit Method02:58
Summary Method of Depreciation07:06
Related Topics 
Introduction to Related Topics01:25
Change in Method of Dep11:49
Revaluation of Asset07:33
Revision of Estimates05:23
Prov for Repairs & Renewal02:57
Summary Related Topics05:25
Additional Questions10:32


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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