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Overview

Whenever a Fixed asset is purchased, the value of the asset is paid and the amount is not deducted from the Company expenses as it will have a direct effect in the Balance Sheet and company net profit. An Account will be created for that fixed account with the value of the asset, depreciation value and total number of months/years to be depreciated.


Creation and Depriciation

So for every month, the depreciated amount mentioned will be debited to the company expenses, and will be credited from the accumulated Depreciation account. The same transaction will be continued for the number of months mentioned.