JYOTHIKA , Dr G Sudhakar 02 7(1) In the usual course of business assets are not retained with the idea of resale rather they are held with theintention of being used continuously to produce or provide goods or services Things like land buildingsmachinery cars furniture and fixtures are examples To accurately assess the companys financial healthand profitability it is necessary to value its fixed assets Many years of service are anticipated from fixedassets Whether due to use the passage of time or some other factor the value of these assets declines overtime Depreciation allows for the reduction of fixed assets when they are used up and their value is turnedinto cash Since depreciation is a component of overall production costs accurate income calculationrequires accurate depreciation measurementThe records are kept in order with the going concern element of the business unit in mind when financialtransactions are documented According to the going concern analysis a company can keep making moneyas long as it has a realistic expectation of being in business forever Much of the rationale for methodicallydepreciating fixed assets from their original cost rather than their present realizable value is based on thispremise Copyright (c) Journal of Science Engineering Technology and Management Science. All rights reserved 2026