Difference between consumption of fixed capital and capital loss??
Dear student,
Consumption of fixed capital:-
Consumption of fixed capital (depreciation) means loss in the value of fixed assets during the process of production.
This depreciation in the value of fixed assets happens due to normal wear and tear or expected or foreseen obsolescence.
The significance of depreciation or consumption of fixed capital is that it is used to distinguish between gross and net variables. In national accounting, gross variables like gross income, investment, etc. are inclusive of depreciation.
Capital loss:-
On the other hand loss in the value of fixed assets due to reasons such as natural calamities, accident or fall in the market value of assets is known as capital loss.
Regards.
Consumption of fixed capital:-
Consumption of fixed capital (depreciation) means loss in the value of fixed assets during the process of production.
This depreciation in the value of fixed assets happens due to normal wear and tear or expected or foreseen obsolescence.
The significance of depreciation or consumption of fixed capital is that it is used to distinguish between gross and net variables. In national accounting, gross variables like gross income, investment, etc. are inclusive of depreciation.
Capital loss:-
On the other hand loss in the value of fixed assets due to reasons such as natural calamities, accident or fall in the market value of assets is known as capital loss.
Regards.