In this section we'll discuss various terms in deposition accounting, cost of an asset, cost of an asset is actual cost you have paid to acquire or buy a fixed assets, which applies to tangible or intangible assets. If you're creating an asset in house all costs which are incurred till the asset became useful for the purpose it was created is included as the cost of that asset, useful life of an asset, this is the time period over which we expect the asset to be productive past its useful life it is no longer cost effective to continue operating the asset. So, it is expected that you will dispose it off salvage value, when you rent to dispose an asset it may have some value which is very small amount that is called salvage value. depreciation is calculated based on asset cost less any salvage value. While this is the power of all depreciation calculation method formulas generally salvage value is very small that therefore in practical accounting scenario, salvage value Always ignored for the calculation of depreciation per month per year.

Accumulated depreciation accumulated depreciation is total depreciation for a fixed asset that has been charged to expense since the asset was acquired or made available for use. accumulated depreciation account is an asset account with a credit balance also known as contra asset account. This means this account appears on the balance sheet as a reduction from gross amount of fixed assets ported tomatoe accumulated depreciation for an asset will increase over time. As the patient continues to be charged against the asset. The average cost of an asset is known as gross cost while original cost of asset less amount of accumulated depreciation and impairment is known as carrying amount of cost or net book value.