explain the rationale behind depreciation. Discuss the pros and cons of straight line, declining balance, and units of production. Discuss with your classmates the differences between them and which one will best suit your key assignment. Make a decision regarding which of these three you will use in your key project.
The term depreciation refers to the reduced value of an asset due to age, damage, or the fact the asset has become obsolete or lost value due to economic processes. The rationale of depreciation is found in the matching principle. What this means is the matching principle requires that a business account match expenses to their related revenues based on their cause and effect relationship. Depreciation estimates the value of the asset and allows the business to transfer the appropriate amount of asset cost <