What Are Depreciation In Tally Accounting

What is Depreciation in Accounting


What are Depreciation? When a company or a firm starts a business, the company has to purchase all kinds of Assets to run that company, but when some time passes, the value of the assets decreases, because of the depreciation on the assets. (Depreciation), Depreciation is always applied on fixed assets, in simple language, Depreciation means that the value of assets decreases. Depreciation is different for each asset. And when a company maintains its account, then it has to apply Depreciation on its assets every year, if the company buys any asset in 40000 /- then it has to apply Depreciation every year. And gradually the value of the assets decreases. Let’s understand.


How to Calculate Depreciation on Fixed Assets

When a company buys assets for business, it does not do it for the purpose of selling assets, the company buys assets for its own use, such as plant, machinery, computers, printers, land, building, office, bike, cars. , buses, furniture etc., and on all these the company has to apply Depreciation at the end of the year, but there are some assets on which any company or any firm does not have to give any kind of Depreciation like land, live Depreciation of any kind is not imposed on stock, goodwill, copyright these assets.
Depreciation is a Type of Indirect Expense which is always incurred on fixed assets, and this company has to be applied every year on its fixed asset, no company can impose depreciation on its assets according to its own. It is determined by the government that how much depreciation will be taken on which assets. And the company has to reduce the value of the assets accordingly by applying Depreciation on its assets.

Depreciation Entry in Tally with Examples

Let’s understand with the following examples.
When the company purchases a computer, the company enters the computer purchase in its tally book.

1/4/ to 30/9/

Particular DebitCredit
Computer A/c40000
Cash / Bank40000

And when Depreciation is applied then these entries are made.
31/3/

Particular DebitCredit
Depreciation A/c16000
Computer A/c16000


We put 40% Depreciation on the computer, due to which the value of the computer is now 24000/- only. Similarly, depreciation has to be applied on all the assets when the Balance Sheet is finalized on 31st March.
But the rules of the government are that if you have purchased any fixed asset before 30 September, then 100% depreciation is applied on that asset. And if you have bought assets after 30 September then only 50% Depreciation charge will be levied on that asset, understand through entry.

DateParticular Debit Credit
1/10/Computer A/c40000
Bank / Cash40000

And when will enter tally on 31st March

DateParticular DebitCredit
31/3/Depreciation A/c 8000
Computer A/c8000


In this way the value of computer will be 32000/- on 31/3/. And when Depreciation will be applied on 31/3/ then full 100% Depreciation will be charged on 32000/-.

Methods of Depreciation Calculation in Tally

  1. Straight line method
  2. Revaluation methods
  3. Reducing balance methods / written down value method
  4. Sum of digit method
  5. Production output method / units of production method
    According to all methods, Depreciation is applied in accounting, but written down value method is used more.

List of Depreciation With Fixed Assets

s. no.Types of AsssetDepreciation on Assets ( % )
1Ships20
2Aircraft40
3Computer 40
4books 40
5tangible assets ( trade mark , licence, franchise 25
6Motor cars15
7building5
8hotels 10
9Wooden structure building 40
10furniture 10
11Plant & machinery 15
12bike, car, scooter, motor car30
13Aeroplane40
14Taxis30
15Containers made of glass40
16wooden parts40
17match factories 40
18router, bridge, FACT device 40

The depreciation imposed on an asset shows how much of an asset has been used by a company. When a company buys assets, it spends part of its cost every year. And the assets keep giving BENEFIT to the company for a long time. Depreciation is the expenses incurred on the assets, then the actual value of an asset is shown in the balance sheet.

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