HomeAccounting Basics

What is depreciation?

Like Tweet Pin it Share Share Email

Definition: Generally Speaking depreciation is the gradual decrease in the value of an asset due to any cause.It has been defined as “The permanent and continuing diminution in the quality,quantity or value of an asset“.

But the term depreciation is commonly used in relation to fixed assets only.It is “that part of the cost of a fixed asset to its owner which is not recoverable when the asset is finally put out of use by him”.It is a business expense and should be debited to profit and Loss account.

Comments (0)

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!