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Depreciation is the accounting process of allocating the cost of a tangible asset over its useful life. It reflects the decrease in value of an asset due to wear and tear, age, or obsolescence. Businesses use depreciation to match the cost of an asset with the revenue it generates, thereby providing a more accurate financial picture. Common methods of calculating depreciation include straight-line, declining balance, and units of production.
What else can I help you with?
What is the accounting treatment of overdepreciated assets?
You need to reverse the entries for excess depreciation - Debit Accumulated Dereciation and Credit Depreciation Expense
What are the specific kinds of assets?
Assets can be devided in to two types. they are Fixed assets & Current Assets. Fixed assets are those which can be used by the organisation in long term. For example Land , plant & Machinery , Buildings etc. being the assets are put to use continueously, the value of the fixed assets decreases which is called DERECIATION. Depreciation is calculated as per the Rates prescribed by the Income Tax Act 1962. Current assets can be defined as those which can be converted in to cash with in one year. for example Bank Balances, Debtors, Stock and Accounts Receivable etc.
