Describe the Depreciation Allowance under Inflation?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Describe the
Depreciation:
Depreciation is an accounting method to calculate the value of a tangible asset during its life expectancy. It measures how much value of an asset has been used up during its useful life.
Depreciation Allowance:
Depreciation allowance is an amount that is deducted from the value of an asset over its useful life due to depreciation being charged by the company and keeps getting accrued in the depreciation allowance account until the end of the life of an asset.
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