Home Fundamentals of Accounting & Auditing Depreciation accounting depreciation methods

depreciation methods


Depreciation is a permanent, continuous and gradual shrinkage in the book value of a fixed asset.

It is the fall in the quality or value of a fixed asset through physical wear and tear due to use or passage of time or from any other cause.

depreciation is a process of allocating the cost of a fixed asset over its estimated useful life in a rational and systematic manner.

The Institute of Charted Accountants of India has defined depreciation as “a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortisation of assets whose useful life is predetermined.

Mock test in Depreciation accounting

Subject :- Fundamentals of Accounting & Auditing

Chapter :- Depreciation accounting – Test 1

Questions :- 25


depreciation methods are Straight Line Method, Depreciation Fund (Sinking Fund) Method, Insurance Policy Method, Annuity Method, Diminishing Balance Method (Reducing Balance Method), Sum of Years’ Digits Method, Double Declining Balance Method, Depletion Method, Machine Hour Rate Method (Service Hours Method), Group Depreciation Method, Inventory System of Depreciation.

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