Question

What Is Depreciation? Explain The Various Types?

Answer 1

Answer:

Explanation

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value.

There are several types of depreciation expense those are Straight line method, Unit of production method, Sum of year digits method and Diminishing balance method. Depreciation expense helps companies generate tax savings. Depreciation needs to be provided because an asset is bound to under go wear and tear over a period of time. This reduces the working capacity and effectiveness of the assets.