BANKING AFFAIRS

Detailed explanation-1: -Definition: The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as depreciation. Description: Depreciation, i.e. a decrease in an asset’s value, may be caused by a number of other factors as well such as unfavorable market conditions, etc.

Detailed explanation-2: -There are generally two main causes of depreciation, first is normal cause such as normal wear and tear due to usage or passage of time, expiration of legal right in case of some assets and obsolescence due to technological advancement and second is abnormal cause such as accidents due to fire, earthquake, floods etc.

Detailed explanation-3: -Depreciation is the in the value of fixed assets due to its wear and tear.

Detailed explanation-4: -Depreciation is not charged on current assets. It is to be charged of Fixed assets only. Depreciation is decline in the book value of tangible fixed assets not market value. The main cause is the wear and tear of fixed asset which is caused due the the usage of assets.

Detailed explanation-5: -Depreciation is the decline in the value of assets due to passage of time, wear and tear, obsolescence and end of legal rights.