Why we cannot depreciate stock

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Javid A Khan

  • Jan 21st, 2012

As per my knowledge stock is not our fixed assets, either it will be sold in future or will be utilized in production of some other products which will be sold in future to generate income for the company, hence it our current asset. And deprecation can be charged only on fixed assets.

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  • Feb 5th, 2012

Stock item has only stock master no Ledger AC, so we can give only Provision for Slow moving stock, cant give depreciation. Depreciation is only for Fixed Assets

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Narendra Chary

  • Aug 24th, 2013

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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Neha Ojha

  • Dec 17th, 2013

Depreciable assets are those assets which are expected to be used during more than one accounting period and as per AS 2 inventories are assets held for sale in the ordinary course of business and so they are not held for more than accounting period as they become obsolete and so we do not depreciate stock.

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isha agarwal

  • Feb 10th, 2014

Depreciation is charged on assets which has a useful life of more than a yea and held for use for the business.As dep. is termed as the wear and tear of the asset ,flux of time,obsolesce etc which is charged to profit and loss ac.while stock is a current asset as it has a life of less than a year and available for sale during the ordinary course of the business.

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