Reference no: EM133284267

An accounting technique used to divide the cost of a tangible or physical asset over its useful life is referred to as depreciation.

- How much of an asset's value has been used is represented by depreciation.By paying for assets over a predetermined time period, it enables businesses to generate revenue from their assets.

- The initial cost of ownership is significantly reduced because businesses do not have to account for them completely in the year the assets are purchased.

- A company's profits can suffer greatly if depreciation is not taken into account.

- Long-term assets can also be depreciated by businesses for tax and accounting purposes.

- Amortization, which takes into account the fluctuation in the value of intangible assets over time, can be contrasted with depreciation.

- Depreciation is the process by which a tangible asset's benefit over its useful life is linked to its cost of use.

- Depreciation can take many forms, including straight-line and accelerated depreciation.

- The sum of all asset depreciation recorded up to a specific date is referred to as accumulated depreciation.

- On the balance sheet, an asset's carrying value equals its historical cost less any accumulated depreciation.

The salvage value of an asset is its carrying value after depreciation has been deducted.