What Is Depreciation. What Are The Causes Of Depreciation? What Are The Duties Of Auditor In This Regard?

On the balance sheet, depreciation will be evidenced by the BOOK VALUE of the asset: Original value less depreciation (loss of value). For example, a machine is worth £1000 during one year, but depreciates by £300 in the next. On the balance sheet, this figure (£700) is what will be recorded within the assets section in the following year.

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Depreciation is basically reduction in the value of an asset over the period of time. In accounting, depreciation is the method of attributing the purchase cost of an asset across its whole useful life. The use of depreciation is a common tool used by companies to affect the financial statements. It gives them tax benefits as well. The job of an auditor is to check and verify that the depreciation claims are true and withstanding.

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Putting it in a nut shell it is wear and tear of items you have bought and used within the business. Hope this helps you out

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