Assignment No 5

DEPRECIATION
Armando Jr Tampadong
 What is DEPRECIATION?

Depreciation is like how a toy loses its value as you play with it over time. The more
you use it, the less it's worth.
 What are the Methods of
Depreciation? Define each method. Straight-Line

Declining Balance

Units of Production
 Businesses depreciate
assets to show how their
value goes down over time
Why Are Assets Depreciated because of wear and tear or
Over Time? obsolescence. It helps them
keep track of the true cost
of using those assets.
 Salvage value is like guessing the lowest price you could sell a
toy for when you're done playing with it. Businesses might look
at how much similar toys sell for or if they can sell parts of the
toy as scrap.

How Do Businesses Determine

Salvage Value?
 How Does Depreciation Differ
from Amortization?

Depreciation is for things like toys or

machines that lose value over time.
Amortization is for things like patents or
copyrights that lose value over time too, but
they're not physical things.
 Think about a restaurant that buys a big fridge.
As they use it to keep food cold, it gets older and
loses value. They'd use depreciation to show how
much value the fridge is losing over time and to
match that loss with the money they make selling
food.

Give a scenario where

Depreciation usually happens.
THE END!