Accounting Reports Interview Question:

Tell me why we cannot depreciate stock?

Submitted by: Administrator

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.
Submitted by: Administrator