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Accountancy is not an easy subject; it requires skill and immense focus, and both at the same time. There are certain topics in the subject which are more complicated than the others. One of them is depreciation. You’ll have to carry out several sums where you’ll need to use your knowledge on depreciation. But before that one needs to know about the features, objectives, causes and factors of depreciation.
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Depreciation in accounting basically means a reduction in the value of an asset owing to usage, wear and tear, change in market conditions, obsolescence, decay, inadequacy or due to some other reason.
Features of Depression:
1. It reduces the book value of a fixed asset.
2. It involves a loss in the value of an asset.
3. It is a process that continues till the end of an asset’s life-span.
4. Depreciable is deducted while figuring out the amount of profit on which tax is to be levied.
5. It involves no cash flow.
6. It is the method of writing off an expenditure which has already taken place.
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