Why we charge depreciation on fixed assets?

Question

please send me some detailed information.

Answer 1

Part of the concept is to spread the investment for a piece of equipment (or other fixed asset) over the life of the asset. For instance, if you spend $5000 on some equipment and expect it to last 5 years, that's pretty much an investment of $1000/year. The IRS has specific rules, so I'm just paraphrasing, but the idea is that you should recover the worth of the asset (or at least account for it) in each year that you use it and it has value.

They don't want to do it all at once, because you could depreciate all your income in one year. Nor do you want to spread it out over 50 years, because the return to you is minimal at best. So it's usually given a time period to depreciate. After that, you've deducted your investment, and you can throw it in the trash or continue to use it.

As for "why", usually expenditures required to generate income are deductable. If you made $1000 but you had to spend $700 to do it, you really only made $300. So deductions are how we account for this sort of thing.

And, as said above, deducting it all in the first year can lead to abuse, and most assets are good for more than a year anyway. So depreciation is basically spreading it out instead of taking it down in one lump sum.

Answer 2

we don't change depreciation on fixed assets, it is prohibited, there are more than one method to calculate dereciation on fixed assets and according to the GAAP, we should stick to one method during the life of the entity, and in case we changed this method a proper justification should be provided when disclosing.
if u meant something else, then please expand on your question

Sorry I've just noticed your question it is CHARGE not GHANGE aright,
Since accounting records should reflect the real value of the entity, and sicne the value of an assets today is less than the value of the same assets in the last year, "consumption factor."
then accounting records should consider this consumption factor that affected the asset, the best way to do so is by depreciating the assets

Answer 3

Why Depreciation

Answer 4

Because they lower in value, basically.

Answer 5

yes