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What is the meaning of negative depreciation?

Answer

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Wiki User
05/10/2012

Negative depreciation, on the other hand, accounts for the opposite process of an asset gaining value over time.

Increases in Value

Some assets do not decrease in value over time, so normal depreciation does not apply. If a business owns an asset that lasts more than one year and goes up in value, it can account for the appreciation using the negative depreciation method. In contrast with depreciation, negative depreciation adds value over time. For example, if an asset goes up in value by $1,000 every year, then a negative depreciation of the same amount every year would adjust the recorded value of the asset.

Examples

Assets that could go up in value include artwork, such as paintings and sculptures. An asset may also increase in value due to importation and currency exchange rate fluctuations. For example. if the importing country's currency drops in value relative to the exporting country's currency, the asset value increases. The importer would then record the asset value at cost and add negative depreciation to increase its recorded value.