What is meant by depreciation?Give example of things that depreciate?And explain how they depreciate?

Answer 1

Depreciate means to fall in value. For example, if you were to buy a brand new car as soon as you drove it off the forecourt, it would slightly depreciate in value.

Over years as I am sure you are aware, it would continue to depreciate in value.

Answer 2

To add to the above, "depreciation" is used in another related sense in accounting. When a business is doing it's finances, "depreciation" counts as a business expense each accounting period. In other words, you might say ABC company experienced $1 million of depreciation this quarter. This is not an actual cash expenditure, it is a means of allocating the cost of equipment that a company buys over time.

Say a company buys a machine for $100,000. It does not subtract the whole amount from its reported earnings that year. (The rules of accounting don't want to encourage business to not invest in their operations after all.) Instead, it might subtract $10,000 a year, for 10 years, to account for the cost of the machine. This is related to physical depreciation, because you'd expect that machine to have a useful life of just 10 years operation before it wears out and must be replaced.

Answer 3

I got an example, a car.
A car generally depreciates in value about 20percent a year, its value goes down by a fifth every year. When you want to sell a car that cost a hundred bucks after a year of use, you can expect to sell it for about eighty bucks. This is because of wear and tare on the machine, plus chemical and metal stress on the general fram and parts.

Answer 4

DEPRECIATION.IS WHEN THE VALUE OF SOMETHING DROPS. FOR INSTANCE WHEN YOU BUY A BRAND NEW CAR,THE PRICE DROPS AS SOON AS YOU DRIVE IT OUT THE SHOWROOM'S. AND IF YOU WEAR A NEW COAT,AND THEN SELL IT THE PRICE DROPS AS IT IS USED GOOD'S.