What is meant by Depreciation? State any three causes of Depreciation.

1.	What is meant by Depreciation? State any three causes of Depreciation.
Answer» Depreciation: Decrease in the value of a fixed asset due to use, Passage of time, obsolescence and accidents is called depreciation. Causes of Depreciation: (i) Because of use, Wear and tear of the asset takes place that results into depreciation. (ii) Even than an asset may not be used its value may decreases because of passage of time. (iii) The development of new technology makes the assets with old technology obsolete and the same may results into depreciation. (iv) Accidents may reduce the value of asset.

Answer»

Depreciation: Decrease in the value of a fixed asset due to use, Passage of time, obsolescence and accidents is called depreciation.

Causes of Depreciation:

(i) Because of use, Wear and tear of the asset takes place that results into depreciation.

(ii) Even than an asset may not be used its value may decreases because of passage of time.

(iii) The development of new technology makes the assets with old technology obsolete and the same may results into depreciation.

(iv) Accidents may reduce the value of asset.

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