What is the depreciation in accounting? Depreciation is the allocation of the cost of fixed assets over the years of its working life. Indian Accounting Standard (AS-6) states that Depreciation is allocated so as to charge a fair proportion of the depreciable amount in each accounting period during the expected useful life of the assets. Long-term fixed assets are used in the process of earning revenue. Due to regular use, such assets gradually lose their service potentials. Such losses are considered as expired costs which have to be matched against the periodic revenues. The Latin word depretium literally means a reduction of value . So Depreciation means the reduction in the value of assets which has to consider for determining revenue. R.S.Anthony and J.S.Reece observed that the cost of an asset that has a long but nevertheless limited life is systematically reduced over that life by a process called Depreciation . Is depreciation an asset ? What do you thin...
Comments
Post a Comment
If you have any doubts, Please let me know