Causes Depreciation
Depreciation:- The concept of depreciation refers to the process of allocating the initial or restated input valuation ( cost or other basis ) of fixed assets to the several periods expected to benefit from their acquisition and use. The main emphasis of the depreciation process is generally on the computation of the periodic charge to expense or the cost of the product to be matched with the revenues reported in each period. Thus the Concept occupies a significant place in the determination of income and in the measurement of service potential of the assets. Depreciation is a permanent continuing and gradual shrinkage in the book 📚 value of a fixed asset. Depreciation is charged on the fixed assets only. Current assets are never depreciated rather these are valued. Depreciation is charged on the Book 📚 value ( as shown in the books 📚 after charge of depreciation) only, it reduces the value of the asset permanently . Depreciation is charged on a continuous basis.