Finance Manager
97 Points
Joined December 2008
Dear Naresh
The main purpose to provide depreciation on fixed assets below :-
a) To Calculate the True Profits:
b) To show true Financial Position:
c) To make Provision for replacement of assets:
Other reasons are
d) To have some Incidental advantage
e) To have Tax advantage
f) To maintain the original monetary investment of the asset intact.
Internal Reasons:
i) Wear and Tear purpose
ii) Not using
iii) Lack of proper Maintainence
iv) Change in production formal
v) Restriction of production by government
vi) Reduction to demand of the product produced by the asset
vii) Technical progress
viii) Depletion