WELCOME

RAMA VILASAM TRAINING COLLEGE

VALAKOM

POWER POINT PRESENTATION

NAME : REMYA .R.J Subject : Commerce Reg.No : 19014341005

Purchase : 2010Sales : 2014

Purchase Value : 100000Sales Value : 700000

DepreciationDepreciation means decrease in the value of a fixed asset due to wear and tear ,Passage of time, obsolescence, accidents etc.

DEFINITION

Depreciation is defined as “fall in the value of fixed asset owing to wear and tear, obsolescence, passage of time or exhaustion”

OBJECTIVES(i) To ascertain the true result of

the business (ii) To present true Balance sheet.(iii) To retain funds for

replacement(iv) To avoid excess payment of

income tax(v) To fulfil the legal requirements

CHARACTERISTICS OR FEATURES OF DEPRECIATION The term depreciation is used only in respect of fixed assets. it is reduction in the book value of fixed asset expect land Depreciation is a charge against profit Depreciation is different from maintenance. Maintenance means an expense incurred to maintain the efficiency of the asset.

Causes of depreciation Wear and tear obsolescence Passage of time. Depletion.

accident

I. WEAR & TEAR :-Constant use of assets results in wear & Tear especially in the case of plant and machinery furniture and fixtures, motor vehicles etc.

Depreciation may occur due to change in fashion or new invention

II.OBSOLESCENCE:-

III. Passage of time:-Some assets decrease in value merely because of passage of time

IV. Depletion - Some assets are of wasting character due to constant extraction of raw materials

V. Accident :- An asset may reduce in value because of meeting an accident.