Q.On 1 April 2024, Kavya Enterprises purchased furniture for ₹40,000, to be depreciated at 10% per annum under the Straight Line Method, using a Provision for Depreciation Account. Prepare the Furniture Account and the Provision for Depreciation Account for the two years ended 31 March 2025 and 31 March 2026.

The Furniture Account stays at its original ₹40,000 cost throughout; only the Provision for Depreciation Account grows each year with the fresh depreciation charge.

Furniture Account

The Furniture Account is NEVER credited for depreciation under this method — it continues to show the original ₹40,000 cost, unchanged, throughout the asset's life.

Provision for Depreciation Account

A common error is crediting the Furniture Account itself with the depreciation, as under the direct method — under the Provision for Depreciation method, the Asset Account is NEVER touched for depreci …