What is the purpose of depreciating assets?
Depreciation is the reduction of the value of an asset over its useful life. This reduction in value is due to wear and tear or obscelence just to name a few.
Assets are depreciated so that the business accounts can reliably give a fair view of the financial position as at a certain date. This is an application of the prudence concept.
RM
Related Accounting GCSE answers
All answers ▸Discuss the relative merits of a rights issue of ordinary shares and a bonus issue of ordinary shares
how to calculate reducing balance depreciation, provide an example.
What Is straight line depreciation?
What is the difference between capital expenditure and revenue expenditure?