Why we are charged depreciation on machine? ???
Dear Student,
Depreciation is a decrease in an assets value, quality or quantity with the passage of time, accidents and constant wear and tear. Depreciation is charged on all the assets except land.
According to the companies act and income tax act, it is necessary to charge depreciation.
Depreciation is charged to show the real value of the asset in the balance sheet.
It is charged to acertain the correct profit and loss of the buisness, Depreciation must be deducted in the P&L account as it is a loss for the buisness.
Regards