Characteristics of depreciation
Following are the characteristics of depreciation:
· Depreciation is the process of allocation of cost of depreciable asset (capital expenditure) to revenue expenditure or to profit and loss account over the useful life of the asset.
· It is the process of allocation of cost and not the process of valuation.
· It is a decrease in the book value of the asset and not the market value of the asset.
· It is a gradual and continuous decrease in the book value of asset over its useful life.
· It is calculated only for tangible depreciable fixed assets. Depreciation is not provided on intangible and wasting assets.