Non-current assets and depreciation

Depreciation is a method of applying the matching or accruals concept to the cost of non-current assets.

A non-current asset is an asset intended ofr use on a continuing basis in the business. It can be sub-divided into tangible assets (plant, building, motor vehicles, etc.) and intangible assets (goodwill, patents, trademarks, etc.).

Depreciation is the systematic allocation of the depreciablse amount of a non-current asset over its useful life. It maybe:

• use, e.g. plant and machinery or motor vehicles
• physical wear and tear
• passsing of time, e.g. a ten-year lease of property
• obsolescence through technology and market changes, e.g. plant and machinery of a specialised nature
• depletion, e.g. the extraction of material from a quarry.

Related posts:

1. Current vs non current assets
2. Property, plant and equipment
3. Methods of calcuating depreciation
4. Revaluation method
5. Depreciation inventory