DEPRECIATION

By: Aldinette Esto

Business Math
Depreciation

Depreciation is the
systematic allocation of the
acquisition cost of long lived
or fixed assets to the
expenses account of
particular periods that benefit
from the use of the asset.
 In simple words we can say that
depreciation is the reduction in the value
of an asset due to usage, passage of time,
wear and tear, technological outdating or
obsolescence, depletion or other such
factors.
A MACHINE
SCOPE OF DEPERCIATION
 To receive the cost.
 To facilitate the induction of new
asset.
 To find out correct P&L.
 Technological change.
 To know the original position of the
enterprise through proper adjustment
on the fixed asset.
 Methods of determining the
DEPRICIATION of various assets

 Straight Line Method

 Deminishing Balance Method
 Machine Hour Rate Method
 Annuity Method
Importance in Business:

 Depreciation is a way of self finance for an

organization.
 Depreciation is a way of decreasing taxes that
the government claims as the company doesn't
have to pay taxes on depreciation which
consequently enlarges the cash flow of the
company.
 Is it a real account or
notional account?
By- Soumya Halder