📘 Lesson — Depreciation Basics in Tally Prime

1. Depreciation kya hoti hai?

Depreciation ka matlab hai kisi fixed asset ki accounting value ka time, usage, wear & tear ya obsolescence ke karan gradually reduce hona.

Simple Words Mein

Asset purana/use hone ke saath uski value accounting records mein gradually reduce karna = Depreciation

Examples

• Computer
• Laptop
• Furniture
• Machinery
• Vehicle
• Office Equipment

Agar DSD Computers ne ek computer ₹60,000 mein purchase kiya aur uski accounting life ke dauran uski value gradually reduce hoti hai, to har applicable period mein depreciation recognize ki ja sakti hai.

2. Depreciation ki Need kyun hoti hai?

Business assets ko use karne se unki value/accounting benefit gradually consume hota hai.

Depreciation record karne ka purpose:

1. Asset ki carrying value ko appropriate amount par show karna
2. Asset ke use se related expense recognize karna
3. Profit ko more accurately calculate karna
4. Financial statements ko meaningful banana
5. Asset ki remaining book value track karna

3. Depreciation kin Assets par lagti hai?

Generally depreciation depreciable fixed assets par apply hoti hai.

Common Examples

Asset	Depreciation Example
Computer	Yes
Laptop	Yes
Furniture	Yes
Machinery	Yes
Vehicle	Yes
Office Equipment	Yes
Building	Depending on accounting/tax treatment
Land	Generally not depreciated

Important

Exact depreciation treatment applicable accounting standards, business policy aur tax rules par depend kar sakta hai.

4. Depreciation ka Simple Example

DSD Computers ne ek computer purchase kiya:

Cost = ₹60,000

Suppose accounting calculation ke according annual depreciation:

₹10,000

To year-end par:

Depreciation Expense = ₹10,000

Asset ki carrying amount:

₹60,000 − ₹10,000 = ₹50,000

Simple Flow

Asset Cost ₹60,000

↓

Depreciation ₹10,000

↓

Carrying Amount ₹50,000

5. Depreciation ka Accounting Effect

Depreciation ke generally do important effects hote hain:

1. Expense Increase

Depreciation Profit & Loss Account mein expense ke roop mein recognize hoti hai.

2. Asset Carrying Amount Reduce

Asset ki carrying amount reduce hoti hai.

Example

Depreciation = ₹10,000

P&L → Expense ₹10,000

Asset → Carrying Amount decreases by ₹10,000

6. Depreciation ki Basic Journal Entry

Standard Basic Entry

Depreciation A/c Dr.
To Asset A/c

Example

Computer depreciation = ₹10,000

Depreciation A/c Dr. ₹10,000
To Computer Equipment A/c ₹10,000

Why?

• Depreciation = Expense → Debit
• Asset value/carrying amount reduction → Credit in this basic direct-adjustment approach

7. Depreciation Tally Prime mein kaise Record Karein?

Depreciation adjustment ko generally Journal Voucher — F7 se record kiya ja sakta hai.

Step 1

Gateway of Tally → Vouchers

Step 2

Press:

F7 — Journal

Step 3

Date select karein.

Example:

31-03-2026

Step 4

Debit Ledger

Select:

Depreciation A/c

Amount:

₹10,000

Step 5

Credit Ledger

Select:

Computer Equipment A/c

Amount:

₹10,000

Step 6

Narration

Example:

Being depreciation provided on computer equipment for the accounting period.

Step 7

Verify

Debit = ₹10,000

Credit = ₹10,000

Step 8

Save

Press:

Ctrl + A

8. Depreciation ka Example — Furniture

DSD Computers ne furniture purchase kiya:

₹1,00,000

Year ke end par depreciation:

₹10,000

Entry

Depreciation A/c Dr. ₹10,000
To Furniture A/c ₹10,000

Effect

• Depreciation Expense ↑ ₹10,000
• Furniture carrying amount ↓ ₹10,000
• Profit ↓ ₹10,000, subject to the overall accounts

9. Depreciation ka Example — Vehicle

Vehicle cost:

₹5,00,000

Depreciation:

₹50,000

Entry

Depreciation A/c Dr. ₹50,000
To Vehicle A/c ₹50,000

Carrying Amount

₹5,00,000 − ₹50,000

= ₹4,50,000

10. Book Value / Carrying Amount

Carrying Amount ka simple meaning hai:

Asset ki cost mein accumulated depreciation aur other applicable adjustments ko consider karne ke baad books mein remaining amount.

Basic Formula

Carrying Amount = Asset Cost − Accumulated Depreciation

Example

Asset Cost = ₹1,00,000

Accumulated Depreciation = ₹30,000

Carrying Amount:

₹1,00,000 − ₹30,000 = ₹70,000

11. Depreciation aur Cash Payment

Ek important concept:

Depreciation ke time actual cash payment nahi hoti.

Depreciation ek non-cash expense hai.

Example:

Computer ki depreciation ₹10,000 record ki.

Iska matlab business ne ₹10,000 cash kisi ko pay nahi kiya.

Instead, accounting records mein:

• Expense recognize hua
• Asset ki carrying amount reduce hui

🧠 Memory Trick

Depreciation = Expense hai, lekin Payment nahi.

12. Depreciation vs Payment

Depreciation	Payment
Non-cash accounting expense	Actual money outflow
F7 Journal generally used	F5 Payment
Asset value/carrying amount reduce	Cash/Bank reduce
Example: Computer depreciation	Example: Computer repair bill paid

13. Depreciation vs Purchase

Purchase

Asset business mein acquire hota hai.

Example:

Computer purchased:

₹60,000

Depreciation

Time/use ke according asset ki carrying amount reduce hoti hai.

Example:

Depreciation:

₹10,000

Flow

Purchase → Asset Created

↓

Use Over Time

↓

Depreciation Recognized

↓

Carrying Amount Reduced

14. Depreciation ke Common Methods

Basic accounting mein commonly ye methods discuss kiye jaate hain:

1. Straight Line Method (SLM)

Har applicable period mein equal depreciation amount recognize kiya jata hai, assuming the relevant conditions.

Basic Formula

Depreciation = (Cost − Residual Value) ÷ Useful Life

Example

Cost = ₹1,00,000
Residual Value = ₹10,000
Useful Life = 5 years

Depreciation:

(₹1,00,000 − ₹10,000) ÷ 5

= ₹18,000 per year

15. Written Down Value Method (WDV)

WDV method mein depreciation asset ki opening written-down value par applicable rate se calculate ki jaati hai.

Basic Formula

Depreciation = Opening WDV × Depreciation Rate

Example

Opening WDV:

₹1,00,000

Rate:

10%

Depreciation:

₹10,000

Closing WDV:

₹90,000

Next year depreciation generally ₹90,000 ke WDV par calculate hogi, subject to the applicable method/rules.

16. SLM vs WDV

SLM	WDV
Generally equal depreciation	Amount generally decreases over time
Cost less residual value and useful life based	Opening WDV based
Easy to calculate	Calculation changes each period
Straight-line approach	Reducing-balance approach

Easy Memory

SLM = Same Amount

WDV = Value Decreases

17. Depreciation ka Profit par Effect

Depreciation ek expense hai.

Therefore:

Depreciation ↑ → Profit ↓

Example:

Profit before depreciation:

₹2,00,000

Depreciation:

₹20,000

Other adjustments ignore karte hue:

Profit after depreciation:

₹1,80,000

18. Depreciation ka Balance Sheet par Effect

Depreciation asset ki carrying amount ko reduce karti hai.

Example:

Computer:

₹80,000

Depreciation:

₹15,000

Carrying amount:

₹65,000

Balance Sheet mein asset ki carrying amount accordingly reflect hogi.

19. Accumulated Depreciation

Accumulated Depreciation ka matlab hai kisi asset par ab tak recognize ki gayi total depreciation.

Example

Computer Cost:

₹1,00,000

Year 1 Depreciation:

₹10,000

Year 2 Depreciation:

₹10,000

Year 3 Depreciation:

₹10,000

Accumulated Depreciation:

₹30,000

Carrying Amount:

₹1,00,000 − ₹30,000 = ₹70,000

20. Direct vs Accumulated Depreciation Approach

Basic learning mein aapko do accounting approaches mil sakti hain:

Direct Method

Depreciation directly asset account ke against adjust hoti hai.

Depreciation Dr. → To Asset

Accumulated Depreciation Method

Depreciation ko separate Accumulated Depreciation account mein record kiya ja sakta hai.

Depreciation Dr. → To Accumulated Depreciation

Is approach mein original asset cost separately visible reh sakti hai aur accumulated depreciation alag track hoti hai.

Important

Actual ledger setup business ki accounting policy aur reporting requirements ke according decide kiya jata hai.

21. Depreciation ka Complete Practical Example

DSD Computers

Computer purchased:

₹1,20,000

Annual depreciation:

₹20,000

Journal Entry

Depreciation A/c Dr. ₹20,000
To Computer Equipment A/c ₹20,000

After Adjustment

Particular	Amount
Computer Cost	₹1,20,000
Less: Depreciation	₹20,000
Carrying Amount	₹1,00,000

22. Common Mistakes

❌ Mistake 1: Depreciation ko Payment samajhna

Depreciation non-cash expense hai.

❌ Mistake 2: Depreciation ko Purchase samajhna

Purchase asset acquire karne ka transaction hai; depreciation asset ki carrying amount ko reduce karti hai.

❌ Mistake 3: Asset ki complete cost immediately expense kar dena

Depreciable asset ka cost accounting treatment applicable policy/method ke according period-wise recognize kiya jata hai.

❌ Mistake 4: Debit-Credit equal na rakhna

Journal entry mein:

Total Debit = Total Credit

❌ Mistake 5: Accumulated Depreciation ko ignore karna

Multiple years ke depreciation records ko properly track karna important hai.

🧠 Easy Memory Trick

D-A-P

D = Depreciation

A = Asset Value Down

P = Profit Down

Yaad rakho:

Depreciation Expense ↑ → Asset Carrying Amount ↓ → Profit ↓

📊 Quick Revision Table

Point	Depreciation
Meaning	Asset ki carrying amount ka gradual reduction
Nature	Non-cash expense
Common Voucher	Journal
Shortcut	F7
Debit	Depreciation Expense
Credit	Asset / Accumulated Depreciation
Cash Payment	Normally nahi
P&L Effect	Expense increases
Profit Effect	Decreases
Balance Sheet	Asset carrying amount reduces
Common Methods	SLM, WDV

🖥️ Classroom Practical

Company: DSD Computers

Following assets par depreciation calculate aur record karein:

1. Computer

Cost = ₹80,000
Depreciation = ₹10,000

2. Furniture

Cost = ₹1,00,000
Depreciation = ₹15,000

3. Machinery

Cost = ₹2,00,000
Depreciation = ₹20,000

Student Task

Har asset ke liye:

1. Depreciation amount identify karein.
2. Debit ledger identify karein.
3. Credit ledger identify karein.
4. Journal Entry prepare karein.
5. Closing carrying amount calculate karein.

✍️ Practice Questions

Theory

1. Depreciation kya hoti hai?
2. Depreciation ko non-cash expense kyun kaha jata hai?
3. Depreciation ka Profit & Loss par kya effect hota hai?
4. Depreciation ka Balance Sheet par kya effect hota hai?
5. Carrying Amount kya hota hai?
6. Accumulated Depreciation kya hoti hai?
7. SLM kya hai?
8. WDV kya hai?
9. Depreciation aur Purchase mein kya difference hai?
10. Depreciation aur Payment mein kya difference hai?

Practical

Question 1

Computer cost = ₹1,00,000
Depreciation = ₹15,000

Prepare:

• Journal Entry
• Closing Carrying Amount

Question 2

Furniture cost = ₹2,00,000
Annual depreciation = ₹20,000

Prepare:

• Journal Entry
• Closing Carrying Amount

Question 3 — SLM

Cost = ₹1,50,000
Residual Value = ₹10,000
Useful Life = 5 years

Calculate annual depreciation using the basic SLM formula.

Question 4 — WDV

Opening WDV = ₹1,00,000
Rate = 10%

Calculate:

• Current Year Depreciation
• Closing WDV

🎯 Learning Outcomes

Lesson complete hone ke baad student:

• Depreciation ko clearly define kar payega.
• Depreciation ki need explain kar payega.
• Depreciation aur normal payment mein difference samajh payega.
• Asset ki carrying amount calculate kar payega.
• Basic depreciation Journal Entry prepare kar payega.
• Tally Prime mein F7 Journal Voucher use kar payega.
• Outstanding/Adjustment entries ke context mein depreciation samajh payega.
• SLM aur WDV ka basic difference samajh payega.
• Accumulated Depreciation ka meaning samajh payega.
• Depreciation ka P&L aur Balance Sheet par effect explain kar payega.