Depreciation: Understanding the different depreciation techniques

Understanding the different depreciation techniques allows firms to distribute an asset’s cost appropriately throughout its useful life. This article delves into different types of depreciation methods, studying their formulae and presenting practical examples to help with understanding. Depreciation under Section 32 of the Income Tax Act, 1961 is a tax deduction permitted for the decline in value of tangible and intangible assets used for business or profession. It is computed on the Written Down Value (WDV) of each block of assets and follows prescribed rates such as 40% for computers, 15% for plant and machinery, 10% for furniture, 5% for residential buildings, and 25% for intangible assets What is Depreciation ? Depreciation refers to the reduction in the value of a ... Learn what depreciation is, why companies depreciate, and how to calculate it using different methods. See examples of depreciation for fixed assets such as machinery, tools, and equipment. Definition: Depreciation is the method the company uses to spread an asset’s cost over its useful life. The cost of assets spreads over the period because of the economic value of the assets reduces due to their usage. For tangible assets the term is used depreciation , for intangibles, it is called amortization. Accounting depreciation or […]