depreciation

System

Help Needed
studying FRA

Can anyone tell me the importance of depreciation and its application to the final accounts.

System

Re:depreciation

depreciation is important so as to correctly value assets

eg a brand new machine is worth less than a machine that has been used for 4 years.

so we use depreciation to correctly assess its worth.

in the final accounts depreciation appears as a reducation in the value of an fixed asset

in P+L it appears as an expense so its a reducation of profit