2006-08-24 01:05:51 · 3 answers · asked by 3mi 2 in Business & Finance ➔ Other - Business & Finance
Assets differ from expense items in that they provide benefits over several accounting cycles, rather than just the current one. So we set them up as assets and expense them over time via depreciation. It's an attempt to match the accounting description to the economic reality--we receive benefits over time, and we expense the asset over time.
2006-08-24 01:26:24 · answer #1 · answered by Jamestheflame 4 · 0⤊ 0⤋
We depreciate fixed assets because they wear and tear and with time the value of fixed assets reduce.
It is just like the way you insure your motor vehicle today with the value and every year when you renew it the actual cost of the reduces because of the wear and tear.
Logically something you bought today at $ 100.00 after 4 to five years you cannot resell the same thing at the same rate. The price has to be lower.
2006-08-24 08:11:08 · answer #2 · answered by sweetangel 2 · 0⤊ 0⤋
We depriciate fixed asssets to knw the actual cost of the asset....
2006-08-24 08:13:31 · answer #3 · answered by Akshatha 1 · 0⤊ 0⤋