11-12-2010, 06:48 PM
Dear Tennis,Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. In accounting we depreciate fixed assets because of the accounting concept (Matching Concept).
In your eg, 2,000 is the amount of depreciation for one year which means the life of an asset have been reduced by 1 year and we have derived the economic benefit from that asset, so according to matching concept same year revenues should match with same year exenses.That's the the purpose of this concept.Hope you understand it.
Regards,
Faizan
In your eg, 2,000 is the amount of depreciation for one year which means the life of an asset have been reduced by 1 year and we have derived the economic benefit from that asset, so according to matching concept same year revenues should match with same year exenses.That's the the purpose of this concept.Hope you understand it.
Regards,
Faizan
