CAUSES FOR DEPRECIATION
1. Physical deterioration
This may be through wear and tear, when a fixed asset wears out through being used or ' it may be through rust, rot and decay, when a fixed asset falls into a bad physical condition.
2. Obsolescence
An asset becoming out-of-date (or) obsolete either through technological advances or a change in tastes and fashions. When it becomes out of date because newer and more efficient assets are available or it may become inadequate as it is no longer able to meet the needs of the business.
This arises when a fixed asset has a fixed life of a certain number of years e.g. a lease.
4. Depletion
This occurs in assets such as wells or mines: when the worth of the asset falls over a period of time as value is removed from the asset.
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