Additional Depreciation Reserve

Additional Depreciation Reserve

Additional depreciation reserve

It is important to distinguish between 'Depreciation written off' (accumulated depreciation deducted from cost of fixed assets) appearing on the assets side, which represents the cost of wear and tear, i.e., the use of the machinery, plant, etc., and 'Additional depreciation reserve'. The latter is a saving from the taxed profits to provide against increased renewal costs of plant, etc., brought about by inflation.


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