Depreciation Finance Cost Accounting
Depreciation Finance Cost Accounting refers to the process of allocating the cost of tangible assets over their useful lives in a systematic and rational manner. This accounting method recognizes that assets lose value over time due to wear and tear, obsolescence, or other factors, and aims to accurately reflect this decrease in value on the company's financial statements. Depreciation expense is recorded on the income statement to show the gradual reduction in the asset's value, while the accumulated depreciation account on the balance sheet offsets the original cost of the asset. Properly accounting for depreciation is essential for determining the true profitability and financial health of a business.
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