When it comes to the depreciation of plant assets we calculate the amount based on the expected useful life. What happens if that asset's useful life differs from what was expected? For example, say you are in the 10th year of the useful life of an asset and you continue to use this asset for another 5 years in addition. Do you adjust the depreciation schedule? Why or why not?
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.
When it comes to the
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