Depreciation

Depreciation, Fixed Installment Method and Reducing Balance Method

Notes

Depreciation

Depreciation is a non-cash expense and must be charged as revenue expenditure to ascertain the true income a business organization. Only in a few cases fixed assets may appreciate. The most suitable example of appreciation is land.

Fixed Installment Method

Fixed installment method is the one of the methods of allocating depreciation. In this method, every year a fixed amount of depreciation is deducted from the value of assets and the same amount is debited to profit and loss account.