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Causes of depreciation of non-current (fixed) assets
Wear and tear
Obsolescence
Straight-line method of depreciation
A method used in accounting to calculate the fall in value of an asset evenly over its useful life.
Straight-line method of depreciation Formula
Annual Depreciation = purchase price - residual price/estimated useful life
Units of production method of depreciation
A method used in accounting to calculate the loss in value of an asset by estimating the units produced annually.
Units of production method of depreciation (formula)
annual depreciation = yearly units of production/total estimated lifetime production x (original value of asset - residual price)