What Are Depreciating Assets

Those Assets which are depreciated and these assets have Limited Useful due to the constant use in the daily business operations. Examples, are Furniture, Motor Vehicles, Machinery, Office Equipment Like Computers, Telephones / Mobile Phones, Fans etc.,

Explanation:

 

Depreciating Assets have Limited Useful Life i.e., 1 To 2 Years or within 5 Years Depending upon the Nature of the Assets, e.g., Furniture may have more Useful Life as compare to Motor Vehicles. These Assets are separated from Land, Property And Buildings as these are not so much used, so having Long Useful Life as compared to Furniture, Motor Vehicles, etc.

You Can Also Read Out, “Disposable of Depreciable Assets”

For Example, If the Motor Vehicle Costing Rs. 6200, having Residual Value 200 Useful Life of 2 Years, then, the Straight Line Depreciation on Motor Vehicle is recorded in the Journal / Book of Entrepreneur as shown below:

Depreciation Expense - Motor Vehicle a/c 1500

                                                           Accumulated Depreciation - Motor Vehicle a/c 1500

(Depreciation on Motor Vehicle Recorded at the rate of 50%)

Here:

Rate of Depreciation = 1/2 X 100 = 50%

Depreciable Cost = Cost - Residual Value / Useful Life = 6200 - 200 / 2 = 3000

Depeciable Expense = Depreciable Cost X Rate of Depreciation = 3000 X 50% = 1500

In final words, we can say that those Assets which are chargeable to depreciate and having Limited Useful due to the frequent use in daily Business working’s hours are called Depreciating Assets.