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Why we don't consider appreciation value of an asset as an indirect income while we use depreciation as indirect expense?

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Question added by Kripesh Krishnan Kutty Nair , Merchandiser , Al Seer Group
Date Posted: 2015/02/21
Hafiz Amjad Mehmood
by Hafiz Amjad Mehmood , Project Accounting Manager , Huta Group

Depreciation of Asset  carries a certainty of decrease in value of Asset hence is treated in Profit & Loss as a cost of its benefit,

While Appreciation of Asset is the increase in value for which one is not sure how long it will have this positive effect hence to avoid the result of any misjudgment on Profit & Loss it is treated under equity section in balance sheet.  

Malik Mohamed
by Malik Mohamed , Consulting on Finance, HR, ERP, Work/Business Analysis, ERP, Re-structure. , Self Employed

Asset appreciation can still be considered as indirect income in tax regimes where revaluation methods are followed for tax computation purpose. This is applicable mostly in cases of land and buildings. Otherwise this comes in the statement at the time of actual realization. On the other hand depreciation is applicable at a % as stipulated by tax laws of the country for tax computation or else as per actual depreciation rate as the case is certain. 

fayyaz ahmad
by fayyaz ahmad , Internal Auditor , Medicine co

It is because assets is used over a period of time in the business to increase the income.

assets is source or resource to generate the income not objective of business to earn the income.

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