Question

At the time of Disposal of Asset, what will be journal entry for provision for depreciation account?

• A. Asset A/c Dr.
  To Profit and Loss A/c
• B. Provision for depreciation A/c Dr.
  To Asset A/c
• C. Asset A/c Dr.
  To Provision for depreciation A/c
• D. All of the above

Answer 1

The correct option is B Provision for depreciation A/c Dr.

To Asset A/c
When the depreciation is charged on the asset by creating the provision for depreciation account, in such case the assets are shown in the balance sheet on its original value against which provision for depreciation account is created.

If the asset is disposed off, the balance of provision for depreciation is transferred to asset account by passing the below journal entry:

Provision for Depreciation A/c Dr.

To Asset A/c