I learned that Depreciation is also a part in the accounting system since it deals with expenses and allowances. Allowance for depreciation is a reserve account while the depreciation expense is an operating and necessary expenditure of a business entity.
*Depreciation allowance, which is charged off from the value
of a property, may be deducted from gross income.
Depreciation is a way to know the lifespan of a certain equipment or property. It is useful to businessmen, especially those who own factories, since the majority of their properties are machines. Machines are what produces the products they sell and therefore, it plays an important role in the company.
Now that I have a knowledge about this, no matter how simple, I am quite satisfied to be able to learn about it. I may even have use for it in the future if I'm going to have a business that will require mass production. :)
Here is a little example of Depreciation:
