Hi, I am learning MBA part time and i have a difficulty in understanding how the depreciation is accounted in the books. I have learned the various methods to calculate the depreciation and i understand that the depreciation amount is distributed to a number of accounting years during its term of use.
My doubts were, how do you pass an entry of depreciation of a asset in the following years. For eg. I bought a machinery asset for 1 crore. Suppose its usable period is 10 years. So each year i have a depreciation amount of 10 Lack. How am i actually gonna pass this entry in accounts??
After 3 years will we lose track of this asset (machinery) and forget to write an entry for this. Or after 10 years are over, how do we understand that the depreciation for this machinery is done and is over. And in case its sold after a year how do we make sure that this entry is not added the next year.
Could someone help me on this and tell me how these entries are done in real time. Thank you.