: It consistently decreases the "book value" (original cost minus accumulated depreciation) of fixed assets over time.
: It aligns the cost of an asset with the revenue it helps generate during specific accounting periods. depreciation
: It is an expense that reduces net income on paper but does not involve an actual outflow of cash. : It consistently decreases the "book value" (original
Depreciation is an accounting method that allocates the cost of a tangible asset over its useful life to reflect its decreasing value due to wear, tear, or obsolescence. Core Features of Depreciation Depreciation is an accounting method that allocates the
: It primarily applies to physical assets like vehicles, machinery, and buildings; land is generally not depreciated. Causes of Depreciation - BYJU'S
: It is an ongoing reduction that typically continues until the asset's life ends or its value reaches its estimated salvage value.