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Thanks a lot for the replies i recieved for my query. We are into ERP accounting wherein the software caliculates the depriciation per month / per anum. The task is performed at the allocated rate & method any advice in light of the said condition.
No depreciation will be charged on such assets and assets value will not '0' but '1' due to its existence.
Accounting treatment for such assets is as under:
1- The asset has been fully depreciated so, its book value is zero, no more depreciation will be charged on it year to year. But the asset will be kept listed in the assets register having zero book value.
2- If we sell it, then we will pass an entry in the books to show the selling of asset and profit on it as an example if the original price (Gross Value) of that asset was200, and it has been fully depreciated meaning that we have Accumulated Depreciation for this asset200. Now while selling it will reduce the Accumulated Depreciation account with this balance, and meanwhile will reduce the assets value with this gross amount200. and will record the profie whatever we will receive as disposal (eg, if we receive10 for this asset) the entry will be:
Debit Cash/Bank.........10
Debit Acc Dep...............200
Credit profit on Disposal of Assets.............10
Assets Account (Furniture etc).....................200
1) if such assets is sold out then the full value can be accounted as Profit on Sales of assets.
2) If the assets is disposed off, then no accounting entry shall be passed in the books of accounts as the value of such assets will be shown as zero since it is fully depreciated.
