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what is depreciation?

what is depreciation?

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Answers (4)

Gaby
1 month ago
In accountancy, depreciation refers to
two aspects of the same concept: first, the
actual decrease in value of fair value of an
asset, such as the decrease in value of
factory equipment each year as it is used
and wears, and second, the allocation in
accounting statements of the original cost
of the assets to periods in which the
assets are used (depreciation with the
matching principle).[1]
Depreciation is thus the decrease in the
value of assets and the method used to
reallocate, or "write down" the cost of a
tangible asset (such as equipment) over
its useful life span. Businesses depreciate
long-term assets for both accounting and
tax purposes. The decrease in value of the
asset affects the balance sheet of a
business or entity, and the method of
depreciating the asset, accounting-wise,
affects the net income, and thus the
income statement that they report.
Generally, the cost is allocated as
depreciation expense among the periods
in which the asset is expected to be used.
Methods of computing depreciation, and
the periods over which assets are
depreciated, may vary between asset
types within the same business and may
vary for tax purposes. These may be
specified by law or accounting standards,
which may vary by country. There are
several standard methods of computing
depreciation expense, including fixed
percentage, straight line, and declining
balance methods. Depreciation expense
generally begins when the asset is placed
in service. For example, a depreciation
expense of 100 per year for five years
may be recognized for an asset costing
500. Depreciation has been defined as the
diminution in the utility or value of an
asset and is a non-cash expense. It does
not result in any cash outflow; it just
means that the asset is not worth as
much as it used to be. Causes of
depreciation are natural wear and
tear[citation needed].
Dende
1 month ago
Depreciation is any method of allocating such net cost to those periods in which the organization is expected to benefit from the use of the asset. Depreciation is a process of deducting the cost of an asset over its useful life. Assets are sorted into different classes and each has its own useful life.
notyourmate04
2 weeks ago
the same mb you used to ask this question you could have just asked google. SMH馃槕
lucy
3 weeks ago
depreciation is the loss in value of a fixed asset or wear and tear.
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