Depreiciation

Many items such as computers, cars or machinery decrease in value(depreciate) with time as a result of wear and tear of a lack of demand forthose items. On contrary, there are items such as antiques, or jewllwery increasein value(appreciate) with time. However, there are items such as properties canappreciate or depreciate depending on market demand.The estimated loss in value of assets is called depreiciation. Each financial yeara business will set aside money equal to the depreciation of an item The estimatedvalue of an item at any point in time is called a book value.At the end of an item's useful or effective life, its book value is then calledthe scrap value or salvage value.When the book value becomes zero the item is saidto be written off.Book value = cost price - total depreciation to that timeWhen book value = $0, then the item is said to be written offScrap value is the book value of an item at the end of its useful life