BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The term depreciation refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life. Depreciation represents how much of an asset’s value has been used. It allows companies to earn revenue from the assets they own by paying for them over a certain period of time.

Detailed explanation-2: -Noncurrent assets can be depreciated using the straight-line depreciation method, which subtracts the asset’s salvage value from its cost basis and divides it by the total number of years in its useful life. Thus, the depreciation expense under the straight-line basis is effectively the same for every year it is used.

Detailed explanation-3: -As we mentioned above, depreciation is not a current asset. It is also not a fixed asset. Depreciation is the method of accounting used to allocate the cost of a fixed asset over its useful life and is used to account for declines in value.

Detailed explanation-4: -Depreciation expense is recorded on the income statement as an expense and represents how much of an asset’s value has been used up for that year. As a result, it is neither an asset nor a liability.

Detailed explanation-5: -Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.