It is a matching in between the fixed charge expense against the current year’s revenue.The remaining /left which is unrecovered portion should be carried forward to forthcoming years in order to match against the respective revenues.What is the ultimate of the purpose of the depreciation?
The ultimate purpose of the depreciation is to replace the fixed assets only at the moment of becoming useless through the current revenues.
According to Dickens, “depreciation is the permanent and continuous diminution in the quality /quantity / value of the asset. ”
In simple words to understand the terminology depreciation is the permanent decrease in value of the fixed assets.
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