DEFINITION OF DEPRECIATION

The measure of wearing out , consumption or other reduction in useful economic life of a fixed assets; whether through use, passage of time, or obsolescence.

Causes of depreciation: a) Physical. b) Economic. c) Time. d) Depletion

METHODS OF DEPRECIATION.
There are many methods of depreciation; 2 of the methods are : 1.Straight line method .

2. Reducing balance / diminishing balance

BAD DEBTS
-Not collectable debt or uneconomical to pursue Reason = Debtor is missing Debtor deceased etc. BAD DEBT WILL BE WRITTEN OFF AGAIST P&L AND REDUCE THE DEBTOR OUTSTANDING

DOUBTFUL DEBTS

Debts that has some element of doubt in collection, as such provision will be made INCREASE IN PROVISION

Dr. P & L Cr Provision for bad dep.

DOUBTFUL DEBT

DECREASE IN PROVISION

Dr. Provision for doubtful debt Cr. P & L