Basic Features of Depreciation
- The term depreciation is related to depreciable fixed assets only
- It is a charge against profits i.e. an expense to the Profit and Loss A/c
- It is a permanent and continuous decrease in the book value of an asset
- It is caused due to wear and tear, effluxion of time, obsolescence etc.
- It is a non-cash expenditure
Note: Appropriation of profit is the distribution of net profit to various heads. Charge against profit is the deduction from revenue to ascertain net profit or net loss.