Explain two approaches to computing depreciation for afractional period in the year in which an asset is purchased.(Neither of your approaches should require the computationof depreciation to the nearest day or week.)
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Explain two approaches to computing
fractional period in the year in which an asset is purchased.
(Neither of your approaches should require the computation
of depreciation to the nearest day or week.)
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