ABSTRACT
Depreciation measures the decrease in value of an asset. A depreciation schedule is simply a listing of the annual depreciation costs for an asset. While faster and larger depreciation charges are desirable for the company, governments lose since they collect less in income tax. A depreciation method that enables faster recovery of the invested capital is always desirable. Depreciation is basically a means of recovering the cost of the capital invested in the assets that generate income. Assets are allowed annual depreciation deductions from profits, reducing the income tax payable. Depreciation charges modify the gross incomes from the resource. The straight-line-method offers constant recovery; that is why it has been superseded by nonlinear methods that yield faster recovery during the early years of asset life. An asset is any resource used in business. It may be tangible or intangible. Equipment, machines, computers, and buildings are examples of tangible assets.
