Question

State briefly the need for providing depreciation.

Answer 1

The need to provide depreciation is that, it can reflect the exact value of the assets into the books of accounts.

Explanation:

Depreciation is an integral concept used in accounting. It reduces the original value of the assets as per their obsolescence, age, or wear and tear over a particular time period.  

The need for providing the depreciation is as follows:

Depreciation is needed in all types of organization because every asset has some time fixed in which it undergoes obsolescence or wear and tear. If depreciation is not applied on the assets over a time period, it can reduce the working capacity and capabilities of an asset.  

Therefore, there is a need to provide depreciation, so that it can reflect the exact value of the assets into the books of accounts.