What is depreciation with examples

Question

Accepted Answer

Depreciation is the decrease in value of an asset over time due to wear and tear, obsolescence, or other factors.

Depreciation is a method used in accounting to allocate the cost of an asset over its useful life.
It is recorded as an expense on the income statement and reduces the value of the asset on the balance sheet.
Examples of assets that can depreciate include buildings, vehicles, machinery, and computer equipment.
Depreciation can be calculated using various methods such as straight-line depreciation, declining balance method, or units of production method.
For example, if a company purchases a vehicle for $20,000 and expects it to have a useful life of 5 years, they may depreciate it by $4,000 per year.

Accepted Answer

Depreciation means the reduction in the cost of fixed asset due to wear and tear until the asset becomes obsolete.

example: - Machinery, furniture, vehicle .

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