Depreciation, Objectives And Reasons

Depreciation is a reduction value or lost usefulness or expired utility or a permanent fall in the value of fixed assets arising through wear and tear from the utility of those assets in business and includes amortization of assets whose useful life is predetermined.Accounting procedure or process of converting the cost of fixed assets to expense is known as depreciation.It determines and presents the financial position and results of expectations of a firm.Accounting process of converting intangible assets to expenses if called amortization.
Main objectives of providing depreciation are to calculate proper profits, show the asset at its reasonable value.To maintain the original monetary investment of the asset intact and have some incidental advantages, provide for replacement of an asset and finally to have tax advantage.
Depreciation may happen due to two reasons internal and external reasons.Internal may be wear and tear, lack of proper maintenance, change in production format, restriction of production, reduction to demand of the product produced by the asset, technical progress, depletion and unuse of the same.
External Reason may be due to Obsolescence which is induced by new inventions, improvement, loss of demand due to change in fashion and effluxion of time.

Steps in measurement of depreciation include reduction of total depreciation, spreading it over the economic life of the asset.Depreciation depends on following factors total cost of asset which includes the invoice cost, less any cash discount, plus all costs essential to bring the useable condition.Estimated useful service life or economic life and its estimate residual value.Residual value is an estimated sale value of the asset at the end of its life to the business.Estimated residual value should be estimated after deducting the disposal and removal cost.Depreciation accounting deals with cost allocation and not with its valuation.
 

http://expertscolumn.com/content/market

http://expertscolumn.com/content/marginal-cost-costing

http://expertscolumn.com/content/quality-working-life-qwl
 

Article Written by manas

Pen is mightier than sword. It has always been and will be. Creative thoughts can be developed and circulated among the public to overall growth and development. Writing is the only way through which one can do the same. I have a deep inclination towards writing.


Post Your Comment

Related Articles

  • Parle G Original Gluco Biscuits- World Largest Selling Biscuit

    Parle G -Original Gluco Biscuits with milk plus wheat contains ingredients  Wheat flour 66.5%, Sugar, Edible Vegetable Oil, Invert Syrup, Sugar, Citric Acide (330), leavening Agents 503(ii), 500 (ii.  Salt , Milk Solids (0.6%), Emulsifiers 322 or 471, Dough Conditioner 223 and Antioxidant 318.  Contains added flavours (Artifical Flavouring substances- Vanilla).

  • Does Money Rule The World?

    Some people always say that money is not important in their life. But, it is not so in today’s world. Without money everything comes to standstill. The society also respects a man who has enough wealth irrespective of his or her character. Money bonds the relationship better. A wealthy man has many friends. Without wealth everything becomes futile.

  • Mental Revolution

    Mental Revolution is a change in thinking both on the part of management and workers.  Success of implementation of scientific management depends on the mental revolution of management and workers both as to their duty to cooperate in producing the largest possible surplus and to the necesssity for substituting exact scientific knowledge for opinions or the old rule of thumb of individual knowledge.

    If not, all the measures suggested in scientific management system would be useless.  Mental revolution is a change in thinking on both the sides.  

  • Method Of Controlling Pollution

  • LOREAL PLENITUDE DYDRAFRESH ANTI ACNE FOUNDATION

    Loreal Plenitude DyDrafresh Anti-Acne Foundation Cream applied on face, covers minor imperfection firmness and moisture creating a flawless complexion. Powder foundation protects the skin from external irritants such as dust and wind.

    At the same time it allows the skin to breathe not hindering the natural respiration and secretions of the skin. Ingredients of the Anti-Acne Foundation Cream are Vitamin C, Magnesium Phosphate, B-Caroten Melawhite Patent Component.

  • Human Relations Importance

    Human Relations refers to a systematic, developing body of knowledge devoted to explaining the behaviour of individuals or people in the working organization or concern. Human relations are an integral process through which the individual’s attitudes and work are combined or integrated. Purpose of human relations is to help in working more effectively with other people in organizations.

  • Data Collection Through Mailing Questionnaire

    Collecting data by mailing questionnaire methods is quite popular, particularly in case of big enquiries. It is being adopted by private individuals, research workers, private and public organizations and even by Government organizations. In this method a questionnaire is sent usually by post to the persons concerned with a request to answer the questions and return the questionnaire.

  • Strategy And Its Importance

    Strategy is a set of decision making rules or procedures for guidance of organizational behaviour. According to managers strategy means their large scale, future oriented plans with the competitive environment to optimize achievement of organization objectives. It shows a firms ` Game Plan’ and provides a framework for managerial decisions. It also reflects a company’s awareness of how to compete , against whom, when, where and for what.

  • Significance Of Library

    A library is a place where books are kept for the use of readers. People can read books there and can also borrow them. Libraries are the store houses of knowledge. Setting up a library is an old concept. In the ancient days there were no books. Information and knowledge were propagated from the teacher to the taught. But the picture changed with the invention of printing. Knowledge came to be stored in the form of books.

  • Accounting Standard 8 ,9 And 10