Question

Accounting 5205

After completing Chapter 6, describe (in 100-200 words) the purpose of Depreciation (and Amortization an this treatment for Long-Term Assets. After posting your response, respond to one other person's

Answer 1

? Depreciation aims to recognize in the income statement the wear suffered by an asset on account of its use for the generation of income.
The objective of depreciation is not to recover the investment that the company has made for its construction or acquisition. The investment is recovered through the profitability generated by the use of said asset.

? Long-term assets, also known as non-current assets, although they are durable, are not always eternal. Therefore, accounting forces depreciate assets as their normal lives pass, with the accepted general accounting principle of time period, equity, valuation at cost, accrued, objectivity, because they do so naturally by the passing of time, due to its use, due to the wear and tear of the time this asset is used, in order to reflect its best possible value, or to amortize long-term expenses (deferred assets). For this there are tables and methods for accounting treatment.