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Concept of Depreciation
Definition
Depreciation is defined as that portion of the cost of the assets that is deducted from the revenue for assets services used in the operation of a business.
Features
Depreciation is charged on fixed asset only. Depreciation is charged on the book value. It has nothing to do with market value of fixed
asset. Depreciation charged on permanent basis.
Feature (contd)
Once the Depreciation is charged ,it reduces the value of the Asset permanently.
Depreciation is charged on a continuous basis. The charge of Depreciation will decrease the
value of Asset gradually.
Factors determining Depreciation to be charged
Cost of the Assets
Estimated Scrap Value
Estimated Useful Life of Asset
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