Depreciation is to be calculated from the of _____________________. (2024)

I am an accounting expert with a deep understanding of financial statements, particularly in the context of educational materials such as SolveGuides for Standard XII Accountancy. My knowledge spans various accounting principles, including depreciation, which is a crucial aspect of financial reporting. Allow me to demonstrate my expertise by providing detailed information on the concepts used in the given article.

The question presented in the SolveGuides article is related to the calculation of depreciation, specifically focusing on the starting point for depreciation calculation. The options provided are:

A. Asset put to use B. Purchase order of asset C. Receipt of asset at business premise D. Invoice of assets

The correct answer, as verified by Toppr in the solution, is "A. Asset put to use." According to the Companies Act, depreciation is to be calculated from the date when the asset is put to use. This aligns with the generally accepted accounting principles, where depreciation is recognized as an expense over the useful life of the asset, starting from the date it is actively utilized in the business operations.

Now, let's delve into the concepts mentioned in the additional questions within the SolveGuides:

Q1: Current assets of a business firm should be financed through

• This question likely refers to the financing sources for current assets. Current assets are typically financed through short-term liabilities, such as current liabilities and short-term debt.

Q2: A company has to disclose depreciation provided on fixed assets and amortization of intangible assets under ___

• The disclosure of depreciation on fixed assets and amortization of intangible assets is usually made in the financial statements under the notes to the accounts or in the financial statement footnotes.

Q3: Depreciable amount of a depreciable asset is ____.

• The depreciable amount of an asset is its cost less its estimated residual value. This represents the portion of the asset's cost that is subject to depreciation over its useful life.

Q4: __ is a summary of all assets and liabilities on a particular date.

• This blank is likely filled with "Balance Sheet." The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time, presenting its assets and liabilities.

Q5: The cost of a small calculator is accounted as an expense and not shown as an asset in a financial statement of a business entity due to __.

• The cost of a small calculator is expensed rather than capitalized as an asset due to its immateriality or because it is expected to be consumed within a short period, and its value doesn't significantly contribute to future economic benefits.

In conclusion, the SolveGuides article covers fundamental concepts in accounting, including depreciation calculation, financing of current assets, disclosure of depreciation and amortization, depreciable amount determination, balance sheet presentation, and the treatment of small expenses in financial statements. If you have any further questions or need additional clarification, feel free to ask.