Major characteristics or features of depreciation can be listed as follows:
1. Relation With Fixed Assets
Depreciation is related to fixed assets such as buildings and machinery except land.
2. Fall In The Value
It is continuous fall or decrease in the value of assets.
3. Causes
Depreciation arises due to wear and tear, depletion, obsolescence, inadequacy, effluxion of time, accidents etc.
4. Continuous Process
Depreciation is a continuous and gradual process of decrease in the value of assets.
5. Charge Against Profit
True profit of the business is ascertained after deducting depreciation expenses from operational profit.
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6. Non-cash Expense
Depreciation is a non-cash expenditure.
7. Tax Purpose
Taxable profit of the firm is determined by deducting depreciation expenses from the operating profit.
