Bad debt
Fixed assets depreciate because through depreciation process cost of fixed asset charged to all those fiscal years in which that fixed asset is used.
Fixed assets are the assets of business concern. The value of these assets, except land, gets depreciated year by year and the allowance of such depreciation is availed for tax exemption purposes on a regular basis. When such the assets are sold for a consideration, it is called the "sale of fixed assets" and the gain / loss on sale of such assets is assessed based on the written down value as on the date of such transaction.
You need to see the bigger picture first i.e. why do we do accounting? The reason is to know the true and fair financial condition and progress of the business. So, how does depreciation helps us to see the true and fair view of the business? Depreciation is charged on fixed assets. Fixed assets last for years and usually accounts are prepared periodically usually a yearly. Fixed assets loose value with time and usage and a ton other things. So that loss of value need to be accounted for in order to see the true and view of the business. And depreciation is not a charge actually its a notional (presumed) charge because depreciation does not cause any outflow of cash. Its a process of allocating the investment made on the purchase of a fixed asset. I hope this answers your question.
in my point of view fixed assets are fix by nature and gives fix type of revenue and there is less chance of risk in it and on the other hand current assests are not fix likecash receipts,debtors .there is more risk factor in it.
Accumulated depreciation appears on the balance sheet in the fixed assets section. It's important to keep all the financial aspects of a balance sheet in order so that they can be understood by multiple readers.
If fixed assets are properly maintained, depreciation is unnecessary do you agree.?
depreciation of fixed assets reduces the profit as depreciation is also an expense.
on Fixed Assets
Depreciation is the method of allocation of part of cost to all fiscal years to which fixed asset is used for revenue generation to income statement
Depreciation on Fixed Asset (Furniture, Building) are considered as Non-Current Assets
Depreciation.
The depreciation to fixed asset ratio measures how diligently the company is replacing its old fixed assets with replacements. Companies will acquire fixed assets such as new buildings or machinery with hopes of gaining sales over the lifespan of those assets.
One of the advantages of fixed assets are that over the period of the fixed asset, the total burden of depreciation and repair costs are disproportional over the effective life of the asset. One of the disadvantages is that the depreciation is not a suitable method for assets like plants and machinery as depreciation is constant while the repairs on such assets will be heavier in later years.
Debit Depreciation Expense Credit Accumulated Depreciation
International Accounting Standard number 16 applies to valuation and depreciation of fixed assets.
Depreciation is always charged on fixed assets and it does not has any relation with individual or company status.
Depreciation is the wear and tear charge allocated to specific fiscal year thorugh income statement for related fixed tangible assets while amortization is same as depreciation just it is done for intangible fixed assets.