Q.On 1 April 2024, Sri Ganesh Traders purchased furniture for ₹50,000, to be depreciated at 10% per annum under the Straight Line Method, maintaining 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 fixed at its original ₹50,000 cost throughout; only the Provision for Depreciation Account grows each year with the fresh charge.

Furniture Account

The Furniture Account is never credited for depreciation under this method, so it continues to display the original ₹50,000 cost, unchanged, for as long as the asset is owned.

Provision for Depreciation Account

A frequent 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 depreciati …