What is the purpose of depreciating assets?

Depreciation is the reduction of the value of an asset over its useful life. This reduction in value is due to wear and tear or obscelence just to name a few.

Assets are depreciated so that the business accounts can reliably give a fair view of the financial position as at a certain date. This is an application of the prudence concept.

Answered by Rufaro M. Accounting tutor

3356 Views

See similar Accounting GCSE tutors

Related Accounting GCSE answers

All answers ▸

What is the difference between capital expenditure and revenue expenditure?


Discuss the relative merits of a rights issue of ordinary shares and a bonus issue of ordinary shares


What differentiates management accounting from financial accounting?


Distinguish between the following two methods of depreciation: straight-line and diminishing balance method.


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences