Q).State four main causes of providing depreciation.
Answers
Answer:
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. ...
Perishability. Some assets have an extremely short life span. ...
Usage rights. ...
Natural resource usage. ...
Inefficiency/obsolescence.
Explanation:
Answer:
Wear and tear. Any asset will gradually break down over a certain usage period, as parts wear out and need to be replaced. Eventually, the asset can no longer be repaired, and must be disposed of. This cause is most common for production equipment, which typically has a manufacturer's recommended life span that is based on a certain number of units produced. Other assets, such as buildings, can be repaired and upgraded for long periods of time.
Perishability. Some assets have an extremely short life span. This condition is most applicable to inventory, rather than fixed assets.
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