The
process of allocating the cost of fixed asset over its estimated useful life is
called depreciation.
The major causes of depreciation area unit as follows:
1. Wear And Tear wear and tear discuss with a decline within the efficiency of plus owing to its constant use. once an asset losses its efficiency, its worth goes down and depreciation arises. this is often true just in case of tangible assets like plant and machinery, building, furniture, tools and equipment utilized in the plant.
2. Effusion of your time the worth of asset might decrease due to the passage of your time though it's not in use. There area unit some intangible fixed assets like copyright, patent right, and lease hold premises that decrease its value as time elapse.
3. Exhaustion an asset might loss its value due to exhaustion too. this is often the case with wasting assets like mines, quarries, oil-wells and forest-stand. On account of continuous extraction, a stage can return wherever mines and oil-wells get fully exhausted.
4. obsolescence Changes in fashion area unit external factors that area unit responsible for throwing out of assets though those are in physical fitness. for instance black and white televisions became obsolete with the introduction of color TVs, the users have discarded black and white TVs though they're in good condition. like loss on account of recent invention or modified fashions is termed as obsolescence.
1. Wear And Tear wear and tear discuss with a decline within the efficiency of plus owing to its constant use. once an asset losses its efficiency, its worth goes down and depreciation arises. this is often true just in case of tangible assets like plant and machinery, building, furniture, tools and equipment utilized in the plant.
2. Effusion of your time the worth of asset might decrease due to the passage of your time though it's not in use. There area unit some intangible fixed assets like copyright, patent right, and lease hold premises that decrease its value as time elapse.
3. Exhaustion an asset might loss its value due to exhaustion too. this is often the case with wasting assets like mines, quarries, oil-wells and forest-stand. On account of continuous extraction, a stage can return wherever mines and oil-wells get fully exhausted.
4. obsolescence Changes in fashion area unit external factors that area unit responsible for throwing out of assets though those are in physical fitness. for instance black and white televisions became obsolete with the introduction of color TVs, the users have discarded black and white TVs though they're in good condition. like loss on account of recent invention or modified fashions is termed as obsolescence.
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