Question

s Define Depreciation​

Answer 1

${ \huge{ \mathtt{ \bold{ \underline{Answer }}}}}$

The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as depreciation. ... Opposite of depreciation is appreciation which is increase in the value of an asset over a period of time.

Answer 2

ANSWER :

❒ Depreciation :-

In accounting, Depreciation can be defined as the process of allocating the net cost of fixed assets over its estimated useful life.

• ★ The word "Depreciation" has been derived from the Latin word "Depretum". 'De' means 'decline' and 'pretum' means 'price'. Hence, "Depreciation" mean "decline in price".

• ★ Depreciation is the loss or decrease in the value of fixed assets due to their constant use and expiry of time.

$\underline{ \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: }$

ADDITIONAL INFORMATION :

❒ Cause of Depreciation :-

• ➯ Constant use

• ➯ Expiry of time

• ➯ Expiry of legal rights

• ➯ Obsolescence

• ➯ Accident

• ➯ Depletion

$\underline{ \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: }$

❒ Methods of providing Depreciation :-

• ➯ Straight Line Method or Original Cost Method or Fixed Inst alment Method.

• ➯ Diminishing Balance Method or Written Down Value Method or Reducing Balance Method.

• ➯ Ann uity Method.

• ➯ Depeciation Fund Method.

• ➯ Insurance Policy Method.

• ➯ Revaluation Method.

• ➯ Depletion Method.

• ➯ Machine Hour Rate Method.