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Depreciation


The lives of fixed assets are not limited to a single accounting period (i.e. to 12 months).

Depreciation represents the fall in the value of these fixed assets, either due to their use, due to
time, or due to obsolescence. Essentially, depreciation divides up the historic cost of a…

Page 2

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The depreciation charge per year will be entered in the profit and loss account of the business as an
expense, since it represents that part of the cost of the fixed asset that has been usedup (i.e.
expired).

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