What is depreciation and it's types

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 non-cash expense that reduces the value of an asset on the balance sheet
There are three types of depreciation: straight-line, accelerated, and units of production
Straight-line depreciation is when the asset loses an equal amount of value each year
Accelerated depreciation is when the asset loses more value in the early years and less in the later years
Units of production depreciation is when the asset loses value based on how much it is used or how many units it produces
Examples of assets that can be depreciated include buildings, machinery, vehicles, and computers

Accepted Answer

It's an important accounting concept that helps businesses accurately report their financial performance and make decisions about asset management.

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