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Depreciation : -
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  • Depreciation is the loss in the value of the property due to its use, life, wear, tear, decay and obsolesce.
  • This is an assessment of the physical wear and tear of the building or property and is naturally depends on its original condition, quality or maintenance and made of use.
  • Thus the value of a building or property decreases gradually up to the utility period due to depreciation.
  • There are different methods to calculate deprecations.
  • Whatever, the method is adopted book value of a property at a particular time is the original cost less all depreciations till the time.
  • The general annual decrease in the value of a property is known as annual depreciation.
  • The present value of an old building should be worked out on the basis of an annual rate of physical deterioration multiplied by the building age and concluding by making a final adjustment for obsolescence.
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