Depreciation of assets is provided for provided for in consideration of

Depreciation of assets is provided for in consideration of wear and tear. When a company acquires a fixed asset, it is expected to be used over a period of time to generate income for the business. However, over time, the asset gradually wears out or becomes obsolete, leading to a reduction in its value. To account for this reduction in value, the cost of the asset is spread over its useful life through an accounting process called depreciation. Depreciation is an estimate of the amount that the asset has decreased in value due to wear and tear or obsolescence over the accounting period.