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depreciation defenition

depreciation defenition

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Depreciation

The financial value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as Depreciation. Depreciation can also be referred to as reallocating the cost of tangible asset over the useful life of the asset. Some examples of the assets that depreciate over a specific period of time are Machinery, Equipment, Building, Furniture etc. Depreciation is recorded in the Profit and Loss account either on a monthly or an annual basis. Various methods of Depreciation are Straight Line Method, Double Declining Balance Method, Units of Production Depreciation etc.

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