Question

what is the depreciation ? explain their characteristics​

Answer 1

Explanation:

In common usage the term ‘depreciation’ refers to a decline in the value of any kind of property. But in Accounting its use is restricted to the expiration of the cost of tangible fixed assets. Except land, all other physical assets have a limited period of useful life.

They are used to generate income over its economic life. Hence, their cost should be properly allocated as expense to the accounting periods in which these assets are used.

Characteristics of Depreciation:

(a) Depreciation refers to fall or shrinkage rather than an increase in the value of an asset.

(b) It refers to a fall in book value of the asset. This value may or may not be equal to the market value or the cost price of the asset.

(c) The fall in book value is a slow and gradual process rather than a sudden event. It is always continuing and a permanent shrinkage.

(d) Depreciation is restricted to the fall in the value of fixed assets. Once a fixed asset is put to use, depreciation begins to occur and it stays there forever.

Answer 2

ANSWER :

In accounting, depreciation is the process of allocating the net cost of fixed assets over ots estimated useful life.

• According to R.N. Carter, "Depreciation is the gradual and permanent decrease in the value of an asset from any cause".

The term "Depreciation" represents loss or diminution or decrease or decline in the value of fixed Asset. The word "Depreciation" has been derived from the Latin word "Depretum". 'De' means 'decline' and 'pretum' means 'price'. Hence, "Depreciation" mean "decline in price".

The characteristics of depreciation are as follows :

• [1] Depreciation is a permanent, gradual and continuous decrease in the value of a fixed asset and it continues till the useful life of the asset.

• [2] Depreciation is a charge agaisnt profit for a particular accounting period.

• [3] Depreciation is always computed in a systematic and rational manner as it is not a sudden loss.

• [4] The term 'depreciation' is used only in respect of tangible fixed assets.

• [5] Depreciation decreases only the book value of the assets. It has no relation with the market value of the assets.

• [6] Depreciation is a process of allocation of expired cost and not of valuation of fixed assets.

• [7] The amount of depreciation charged cannot exceed the book value of the asset.

• [8] Depreciation has no relation with the amount spent on repairs and maintenance of the assets.