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11 June, 19:01

Do Fixed Costs also include depreciation?

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  1. 11 June, 20:04
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    Yes

    Explanation:

    Depreciation is an accounting term that describes the reduction in book value of fixed assets. The reduction in book value arises due to wear and tear, corrosion, or passage of time. Accountants use depreciation to spread the cost of an asset throughout its useful life.

    The depreciation amount is usually spread evenly throughout the meaningful life of the asset. Accelerated depreciation methods account for a higher percentage of an asset in its early years. Regardless of the method used, the general consensus is that assets are useful for a limited number of years. The cost of the asset is usually spread throughout those years. In each of the years, depreciation amount will be charged to the profit and loss account whether the asset was used or not. That is the reason why depreciation is a fixed cost.
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