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Obsolescence is another factor leading to depreciation of fixed assets. Obsolescence means the fact of being “out-of-date”.

Obsolescence implies to an existing asset becoming out-of-date on account of the availability of better type of asset. It arises from such factors as:
  • Technological changes;
  • Improvements in production methods;
  • Change in market demand for the product or service output of the asset;
  • Legal or other description.

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