Date of Award

Spring 1959

Document Type



Business, Accounting & Economics

First Advisor

Luke Rivers


In order for one to understand or to undertake any study at the recent developments in accounting for depreciation, he oust first understand what constitutes depreciation of assets. Since there are so many different types of assets, depreciation has been defined in many different ways. Although many of these definitions are correct they vary widely since some are more limited than others.

One expansive definition that has been commonly accepted is this: "Depreciation basically is that part of the bundle of services believed at an earlier date to have been obtainable from a limited life asset or, more commonly, a group of limited life assets, and now found a) consumed as originally estimated; b) consumed, at a greater or less rate, from normal causes; c) physically dissipated by accident or other unanticipated causes; d) uneconomical when compared with the same or similar services available from other sources; or e) following changes in product, product demand, or operating methods, unsuited to the future needs of the owner."1 Although this a theoretically correct definition, it does not convey to the reader any concrete idea as to what depreciation accounting is or of what real importance is depreciation. Defining the term still in a broad sense but with more specific reference to its causes, it can be said that depreciation in the loss not restored by current repair, which is due to all the factors causing the ultimate retirement of the property. These factors take into account wear and tear, inadequacy and obsolescence.2 Referring further to the fact that depreciation is a loss of service, a correct concept is that depreciation is the lost usefulness, expired utility, and diminution of service yield from a fixed asset 3 or fixed asset group that cannot or will not be restored by current maintenance, and is caused by the aforementioned factors.4

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Accounting Commons