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Depreciation means decline in the value of fixed assets due to use, passage of time or obsolescence.
According to R.N. CARTER, " Depreciation is gradual or permanent decrease in the value of asset from any cause".
Harsharaj Datta
Aziz Ahmed
Wiki User
∙ 8y agoGoods that are purchased for use in a business can be depreciated to account for normal wear and tear. Most light equipment, such as computers, are depreciated over 3 years. It helps the business to prepare to replace the items after their normal life cycle by allowing them to deduct part of the value each year. Other items are depreciated over longer periods of time, 5 or 10 years. There are General Accounting Principles and tax regulations that provide details on how and what items are depreciated.
Although depreciation does NOT help a business replace assets it does gives some allowance to how their purchase is reported. The "Matching" concept in UK GAAP accounting relates the Useful Economic Life of an asset to the benefits it generates.
A portion of the asset value is charged to the profit and loss as depreciation to reflect the portion that is received as a benefit in that period, and the remaining book value of the asset is kept on the balance sheet. Some assets will provide dimishing returns over their lifetime, thus the depreciation charge reduces in subsequence periods (e.g. reducing balance method), some assets will provide consistant usefulness and thus the charge is consistant (e.g. straight line method). ~major.steve~ The main things is the work of depreciation.The depreciation is worked in very simple way just suppose a business earns profit of 50,000 $ and distribute this profit among the proprietors, in the second situation the same business earns 50,000$ and charged depreciation 5000$ and distribute the remaining profit i-e 45,000$ it means 5000$ are still in the pocket of business which will utilized by it at the time of purchasing the new asset after disposed off this old one.and this is the function of depreciation to maintain the liquidity of business at the time of acquiring the new asset which requires a bulk of money.
Depreciation is the amount something loses in value as time goes past. For instance, a car becomes less and less valuable as time goes by.
Atsede Tsigabu
Depreciation means it is a decline a value of asset due to usage and economic r functional obsolescence .
Wiki User
∙ 9y agoDepreciation is the reduction in monetary value of an asset - usually a physical one.
abinpoulose72
A reduction in the value of an asset overtime due in particular to wear and tear.
Wiki User
∙ 8y agoto fall in value
Anonymous
he decrease in the value of a vehicle over time
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Distinguish between depreciation policy and the concept of depreciation?
Depreciation policy is management thing that what depreciation method to use and how much depreciation to charge to each asset. Depreciation concepts are concepts which govern the depreciation process which management cannot change they are universal rules to follow depreciation that how straight line depreciation work etc.
What is the entry for accumulated depreciation?
Debit depreciation accountCredit accumulated depreciation
What is the difference between depreciation and accumulated depreciation?
Depreciation is for a particular year (say for Year 3). Accumulated depreciation is the aggregate of depreciation from the beginning (say from Year 1 to Year 3)
What is the journal entry accumulated depreciation?
[Debit] Depreciation account [Credit] Accumulated depreciation
How do you record annual depreciation and accumulated depreciation?
[Debit] Depreciation expense[Credit] Accumulated depreciationAfter that depreciation is shown as part of income statement while accumulated depreciation goes to balance sheet.
How are accumulated depreciation and depreciation related?
Accumulated depreciation and depreciation are related with each other as depreciation is annual expense while accumulated depreciation is the sum of all annual depreciation expenses.
How are accumulated depreciation and depreciation expensese related?
Accumulated depreciation and depreciation are related with each other as depreciation is annual expense while accumulated depreciation is the sum of all annual depreciation expenses.
Why accumulated depreciation exceed depreciation expense?
Depreciation expenses is for one specific fiscal year while accumulated depreciation is the sum of all depreciation expenses that’s why accumulated depreciation exceeds the depreciation if there is depreciation expense in prior year as well.
Distinguish between depreciation policy and the concept of depreciation?
Depreciation policy is management thing that what depreciation method to use and how much depreciation to charge to each asset. Depreciation concepts are concepts which govern the depreciation process which management cannot change they are universal rules to follow depreciation that how straight line depreciation work etc.
What is the entry for accumulated depreciation?
Debit depreciation accountCredit accumulated depreciation
What is the difference between depreciation and accumulated depreciation?
Depreciation is for a particular year (say for Year 3). Accumulated depreciation is the aggregate of depreciation from the beginning (say from Year 1 to Year 3)
What is the journal entry accumulated depreciation?
[Debit] Depreciation account [Credit] Accumulated depreciation
Can you put the word depreciation in a sentence?
Every thing will have depreciation . depreciation is rule of nature.
How do you record annual depreciation and accumulated depreciation?
[Debit] Depreciation expense[Credit] Accumulated depreciationAfter that depreciation is shown as part of income statement while accumulated depreciation goes to balance sheet.
What is an antonym for depreciation?
Appreciation is an antonym for depreciation.
What are the types of depreciation?
There are three types of depreciation. Fixed Installment, Diminishing balance and Component Depreciation.
Is it customary for the depreciation expense account and the accumulated depreciation account to be equal?
No. Accumulated depreciation is depreciation accumulated every year and it will only increase and won't decrease. Depreciation expenses is incurred every year.
