7 Features of Depreciation

Depreciation is considered as an expense only to the extent of the decrease in the value of the asset during an accounting period. In other words, it refers to the value of fixed assets consumed in the production process during an accounting period. The Features of Depreciation are discussed below

Features of Depreciation

The following are the various features of depreciation.

  1. It is a fall in the book value of fixed assets.
  2. It occurs due to normal wear and tear or obsolescence of technology during its use in the business.
  3. It does not affect the market value of the fixed assets. It only reduces the book value of the asset.
  4. The decrease in the value of the fixed assets is permanent in nature.
  5. It is an allocation of the cost of an asset over its effective life.
  6. It is charged only on the Tangible fixed assets. Tangible fixed assets are those which can be seen or touched such as buildings, Machinery, Furniture, etc.
  7. It is a non-cash expense of a business that does not involve any outflow of cash.

Also, Read

Accounting Information

accounting information is often defined as data and facts produced or revealed by the financial statements of a business. This information is usually available within the sort of financial statements, financial reports, etc.

Petty Cash Book

Petty Cash Book is a book that records a large number of small payments such as conveyance, cartage, postage, telegram, and other expenses.

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