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What does depreciation mean in simple words?

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تم إضافة السؤال من قبل Hashif Parakkott , BRANCH ACCOUNTANT , ALHIND TRAVEL AND TOURS
تاريخ النشر: 2013/09/01
مستخدم محذوف‎
من قبل مستخدم محذوف‎

It is basically based on the principal "Wear and Tear". It means that when asset will be put to usage, it will lost its value.

Hence, Depreciation is the systematic allocation of teh value that an asset will loose (Depreciable value) throughout its usful life.

Amr Mohamed
من قبل Amr Mohamed , HR & Admin Director , NEISCO For Modern Water Systems Production

Depreciation is how much value an asset loses over time.

Subhranshu Ganguly
من قبل Subhranshu Ganguly , Quality Analyst. , WIPRO

Depreciation means wear and tear of asset in the long run. All assets depreciate except for land & building whose value may apreciate due to prime location, nearness to metro railway and other factors. In acounting the easiest method of depreciation calculation is the straight line method . Here depreciated value of the asset is value of asset - srap value  /no of years of life of theasset. A depreciation fund can be created over a period of time to purchase a new asset when the current one breaks down.

Anil Kumar VT
من قبل Anil Kumar VT , HR Manager , Indian Air Force

The reduction in value of an asset due to wear and tear or any other cause is known as depreciation.  It is important to show depreciation in the books of accounts failing which the balance sheet would not display a true and fair financial position of business.  Further, depreciation is also charged against the profit of the year on the premise that the asset was actually used to generate revenue in the financial year - so the value of depreciation should be charged against profit in order to arrive at the correct figure of profit or loss.  there are a number of methods for calculation of depreciation which include (a) fixed instalment system or straight line method (b) reducing balance method or diminishing balance method, (c) revaluation method, etc. 

Om Prakash Shrivastava
من قبل Om Prakash Shrivastava , Chief Manager Procurement , Hindustan Construction company

Depreciation is tools in accunting systems to calculate and arrived the value of Equipment each year and update book of accunt

Prince Ninan
من قبل Prince Ninan , Audit Executive , Lewis & Pecker

Depreciation is the reduction in value of asset due to wear and tear. Also the benefit from an asset is generated over a period of time.Hence the cost of asset is written off over its useful life to comply matching principle.

Muhammad Faheem
من قبل Muhammad Faheem , Consultant- Accounts, Audit & Taxation , Basim Associates

Depreciation is simply an allocation of depreciation cost (Cost of Asset-Scrap value) of an asset over its useful life.

 

Life may in years, production in units or or working hours depending upon the pattern of consumption.  

manaf almas
من قبل manaf almas , Auditor , DAR AL NUZUM PUBLIC ACCOUNTANTS

depreciation we can simly  say "decreasing the value of assets"

Muhammad Zeeshan Sarwar
من قبل Muhammad Zeeshan Sarwar , Financial Controller , Arveen General Trading LLC

Depreciation is a non-cash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence over the period of its useful life.

MOHAMED NAJMUS SAKIB SAKIB
من قبل MOHAMED NAJMUS SAKIB SAKIB , Intern , QUAARC SOLUTIONS

An asset, say, a car or a machine, will never have the same value throughout its lifetime. As time passes, the asset loses value known as DEPRECIATION

محمود عبد الحليم عبد المحسن عيد الرحيم مليحى
من قبل محمود عبد الحليم عبد المحسن عيد الرحيم مليحى , مدير مساعد , بنك القاهرة

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