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John Moffat.
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MichelleJ
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Sir I saw your lecture on depreciation but I do have a question that why do we reduce our profit for the year by charging the depreciation expense into SOPL even though we have shown its effect by decreasing our value of the non-current asset into SOFP?
Why depreciation is treated as an expense because we don’t actually spent anything on the machine?
Secondly, is it always charged into operating expenses?
John Moffat
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Reducing the value of an asset makes the business worth less and is therefore an expense.
Where it appears in the SOPL depends on which assets it relates to.
(Are you watching the lectures in chapter order, because they are a complete free course and there is no point in picking out lectures separately?)
MichelleJ
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