Depreciation - What is depreciation and its causes?

Q: What is depreciation and its causes?

Depreciation is a ratable reduction in the carrying amount of a fixed asset. ... The causes of depreciation are: Wear and tear. Any asset will gradually break down over a certain usage period, as parts wear out and need to be replaced. Eventually, the asset can no longer be repaired, and must be disposed of.

Answer

The carrying value of a fixed asset is reduced over time through depreciation.... Wear and tear are the main reasons for depreciation. Over time, every asset will deteriorate due to the inevitable wear and tear of its components. At some point, the asset will be beyond repair and will have to be disposed away.

Depreciation - What is depreciation and its causes?

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