What is depreciation?

Question

Accepted Answer

Depreciation is the allocation of the cost of a tangible asset over its useful life.

Depreciation is a non-cash expense that reduces the value of an asset over time.
It reflects the wear and tear, age, and obsolescence of the asset.
Common methods of calculating depreciation include straight-line, double declining balance, and units of production.
Example: A company purchases a delivery truck for $50,000 with a useful life of 5 years. Using straight-line depreciation, the annual depreciation expense would be $10,000 ($50,000 / 5 years).

Accepted Answer

This is a calculated value of wear and tear of fixed assets in Financial year.