Tell Me Why We Cannot Depreciate Stock?

1.	Tell Me Why We Cannot Depreciate Stock?
Answer» Depreciation is CHARGED only on fixed ASSETS because we are allocating the TOTAL expense of Fixed asset for many years. Stock is a current asset generally used to sell with in a year only. More IMPORTANTLY we show consumption of stock in Trading A/c through Cost of goods sold. (i.e.,Opening stock + Purchase - Closing Stock) That means Stock consumption expenses is already booked in Trading A/c HENCE we do not show again as expense by treating as deprecation. Depreciation is charged only on fixed assets because we are allocating the total expense of Fixed asset for many years. Stock is a current asset generally used to sell with in a year only. More importantly we show consumption of stock in Trading A/c through Cost of goods sold. (i.e.,Opening stock + Purchase - Closing Stock) That means Stock consumption expenses is already booked in Trading A/c hence we do not show again as expense by treating as deprecation.

Answer»

Depreciation is CHARGED only on fixed ASSETS because we are allocating the TOTAL expense of Fixed asset for many years.

Stock is a current asset generally used to sell with in a year only.

More IMPORTANTLY we show consumption of stock in Trading A/c through Cost of goods sold.

(i.e.,Opening stock + Purchase - Closing Stock)

That means Stock consumption expenses is already booked in Trading A/c HENCE we do not show again as expense by treating as deprecation.

Depreciation is charged only on fixed assets because we are allocating the total expense of Fixed asset for many years.

Stock is a current asset generally used to sell with in a year only.

More importantly we show consumption of stock in Trading A/c through Cost of goods sold.

(i.e.,Opening stock + Purchase - Closing Stock)

That means Stock consumption expenses is already booked in Trading A/c hence we do not show again as expense by treating as deprecation.

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