Which accounting concept requires calculation of depreciation?
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Accounting concept 'Prudence' , 'Conservatism' putsforth that assets should not be over valued , profits should not be overstated and liabilities should not be under valued , losses should not be under Stated.....
Depreciation is charged because the fair value of assets fall over a period of time.. due to reasons like physical wear and year , technological obsolescence etc...So Depreciation is charged to ascertain and report the correct value without any overstatement in the financial Statements..That tallies with the 'Prudence' 'Conservatism' concepts
Depreciation is charged because the fair value of assets fall over a period of time.. due to reasons like physical wear and year , technological obsolescence etc...So Depreciation is charged to ascertain and report the correct value without any overstatement in the financial Statements..That tallies with the 'Prudence' 'Conservatism' concepts
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