Question

define depreciation. Explain the reasons for depreciation

Answer 1

Depreciation is a ratable reduction in the carrying amount of a fixed asset. The causes of depreciation are: Wear and tear. Any asset will gradually break down over a certain usage period, as parts wear out and need to be replaced.

Answer 2

Answer:

Depreciation is a ratable reduction in the carrying amount of a fixed asset. Depreciation is intended to roughly reflect the actual consumption of the underlying asset, so that the carrying amount of the asset has been reduced to its salvage value by the time its useful life is over.

The reasons for depreciation are as follows-

1) Wear and Tear.

2) Usage Rights.

3) Natural Resource Usage.

4) Perishability.

5) Inefficiency/Obsolescence.