Please briefly explain why you feel this question should be reported.

Please briefly explain why you feel this answer should be reported.

Please briefly explain why you feel this user should be reported.

Sign InSign Up

AccountingQA

AccountingQA Logo AccountingQA Logo

AccountingQA Navigation

  • Home
  • Ask Questions
  • Write Answers
  • Explore
  • FAQs
Search
Ask A Question

Mobile menu

Close
Ask a Question
  • Home
  • Questions
    • Most Visited
    • Most Active
    • Trending
    • Recent
  • Follow
    • Categories
    • Users
    • Tags
  • Write an Answer
  • Badges & Points
  • Request New Category
  • Send a Suggestion
  • Search Your Accounting Question..

  • About
  • Questions
  • Polls
  • Answers
  • Best Answers
  • Groups
  • Questions
  • Polls
  • Answers
  • Best Answers
  • Groups

AccountingQA Latest Questions

Pooja_Parikh
Pooja_Parikh
In: 1. Financial Accounting > Depreciation & Amortization

What is furniture depreciation rate?

  • 1 Answer
  • 0 Followers
Answer
  1. Rahul_Jose Aspiring CA currently doing Bcom
    Added an answer on December 17, 2021 at 8:51 pm
    This answer was edited.

    Depreciation is an accounting method that is used to write off the cost of an asset. The company must record depreciation in the profit and loss account. It is done so that the cost of an asset can be realised over the years rather than one single year. Furniture is an important asset for a businessRead more

    Depreciation is an accounting method that is used to write off the cost of an asset. The company must record depreciation in the profit and loss account. It is done so that the cost of an asset can be realised over the years rather than one single year.

    Furniture is an important asset for a business. As per the Income Tax Act, the rate of depreciation for furniture and fittings is 10%. However, for accounting purposes, the company is free to set its own rate.

    JOURNAL ENTRY

    Journal entry for depreciation of furniture is:

    Here, depreciation is debited since it is an expense and as per the rules of accounting, “increase in expenses are debited”. Furniture is credited because a “ decrease in assets is credited”, and the value of furniture is reducing.

    TYPES OF DEPRECIATION

    Furniture can be depreciated in any of the following ways:

    • Straight-Line Method – It is calculated by finding the difference between the cost of the asset and its expected salvage value, and the result is divided by the number of years the asset is expected to be used.
    • Diminishing Value Method – It is calculated by charging a fixed percentage on the book value of the asset. Since the book value keeps on reducing, it is called the diminishing value method.
    • Units of Production

    For accounting purposes, the two many methods used for depreciating furniture is the straight-line method and the diminishing value method. However, for tax purposes, they are combined into a block of furniture, where the purchase of new furniture is added and the sale of furniture is subtracted and the resulting amount is depreciated by 10% based on the written downvalue method.

    EXAMPLE

    If a company buys furniture worth Rs 30,000 and charges depreciation of 10%, then by straight-line method, Rs 3,000 would be depreciated every year for 10 years.

    Now if the company decided to use the diminishing value method (or written down value method), then Rs 3,000 (30,000 x 10%) would be depreciated in the first year, and in the second year, the book value of the furniture would be Rs 27,000 (30,000-3,000). Hence depreciation for the second year would be Rs 2,700 (27,000 x 10%) and so on.

    See less
    • 0
    • Share
      Share
      • Share on Facebook
      • Share on Twitter
      • Share on LinkedIn
      • Share on WhatsApp

Sidebar

Question Categories

  • 1. Financial Accounting

      • Accounting Terms & Basics
      • Bank Reconciliation Statement
      • Banks & NBFCs
      • Bills of Exchange
      • Capital & Revenue Expenses
      • Consignment & Hire Purchase
      • Consolidation
      • Contingent Liabilities & Assets
      • Departments & Branches
      • Depreciation & Amortization
      • Financial Statements
      • Goodwill
      • Insurance Accounting
      • Inventory or Stock
      • Investment Accounting
      • Journal Entries
      • Ledger & Trial Balance
      • Liquidation & Amalgamation
      • Miscellaneous
      • Not for Profit Organizations
      • Partnerships
      • Ratios
      • Shares & Debentures
      • Source Documents & Vouchers
      • Subsidiary Books
  • 2. Accounting Standards

      • AS
      • IFRS
      • IndAS
  • 3. Cost & Mgmt Accounting
  • 4. Taxes & Duties

      • GST
      • Income Tax
  • 5. Audit

      • Bank Audit
      • Internal Audit
      • Miscellaneous - Audit
      • Statutory Audit
  • 6. Software & ERPs

      • Tally
  • 7. MS-Excel
  • 8. Interview & Career
  • Top Questions
  • I need 20 journal entries with ledger and trial balance?

  • Can you show 15 transactions with their journal entries, ledger, ...

  • What is furniture purchased for office use journal entry?

  • What is the Journal Entry for Closing Stock?

  • What is loose tools account and treatment in final accounts?

  • What is the journal entry for goods purchased by cheque?

  • What is commission earned but not received journal entry?

  • What is the journal entry for interest received from bank?

  • How to show adjustment of loose tools revalued in final ...

  • Following is the Receipts and Payments Account of Bharti Club ...

Hot Topics

Accounting Policies Accounting Principles Balance Sheet Bank Reconciliation Statement Bill of Exchange Branch Accounting Calls in Advance Capital Capital Expenditure Companies Act Compound Entry Consignment Creditors Current Assets Debit Balance Debtors Depreciation Difference Between Dissolution of Firm Dissolution of Partnership Drawings External Users Fictitious Assets Final Accounts Financial Statements Fixed Assets Fixed Capital Fluctuating Capital Gain Impairment Installation Interest Received in Advance Internal Users Journal Entry Ledger Loose Tools Miscellaneous Expenditure Profit Rent Rent Received in Advance Reserves Revaluation Revenue Expenditure Revenue Reserve Sacrificing Ratio Subscription Subscription Received in Advance Trial Balance Type of Account Uncalled Capital
  • Home
  • Questions
    • Most Visited
    • Most Active
    • Trending
    • Recent
  • Follow
    • Categories
    • Users
    • Tags
  • Write an Answer
  • Badges & Points
  • Request New Category
  • Send a Suggestion

Most Helping Users

Astha

Astha

  • 50,286 Points
Leader
Simerpreet

Simerpreet

  • 72 Points
Helpful
AbhishekBatabyal

AbhishekBatabyal

  • 65 Points
Helpful

Footer

  • About Us
  • Contact Us
  • Pricing
  • Refund
  • Forum Rules & FAQs
  • Terms and Conditions
  • Privacy Policy
  • Career

© 2021 All Rights Reserved
Accounting Capital.