Journal Entry and Ledger Posting for Depreciation on Fixed Assets

Depreciation is an expense related to Tangible Fixed Assets over its useful life. It is the decreasing or reducing value of Fixed Assets during an Accounting year/period.

Depreciation is charged as per the rate percentage prescribed by different Acts such as Companies Act 2013, Income Tax Act 1961 etc. for preparation of Final Account.

Let's know about Journal Entry and Ledger Posting for Depreciation.

When Depreciation is charged on Fixed Assets like Furniture & Fixture, Plant and Machinery etc.

Depreciation Account shows Debit effect and

Fixed Assets Account shows Credit effect.

Journal Entry :

Ledger Posting

In Depreciation Account

In Fixed Assets Account.

Example :

Transaction Date : 31/03/2022

In the Books of M/s.Trimurthy Traders, Depreciation charged on the following Fixed Assets during F.Y- 2021-22.

Computer @40% p.a, on ₹28,500/-

Furniture & Fixtures @10% p.a, on ₹18,100/-

Motor Cycle @15% p.a, on ₹65,700/-

Pass necessary Journal Entry and post them into their respective Ledger Accounts.

Journal Entry

Ledger Posting 

In Depreciation Ledger Account

In Computer Account

In Furniture & Fixtures Account 

In Motor Cycle Account

Depreciation Journal Entry in TallyPrime.

Let's see how to enter the above transaction in TallyPrime.

Steps to enter in TallyPrime. (you can also see Practical Project Practice Sheet -12 Transaction No.252)

Go to Voucher Entry Screen

Press 'F7' or click on 'F7:Journal' 

Press 'F2' or click on 'F2:Date' to enter Date of Voucher/Date of Transaction.

Create Ledger Name 'Depreciation A/c' under group 'Indirect Expenses'

Place Debit Ledger and Credit Ledger Accounts with amount as mentioned in the image below.

Press 'Ctrl+A' to Accept/Save Voucher.

Now Voucher Entry for the above transaction is Complete.