Characteristics of Depreciation :

The following are the important characteristics of depreciation:
(i) Depreciation refers to a permanent, continuous and gradual decrease in the utility value of a fixed asset and it continues till the end of the useful life of the asset.

(ii) Depreciation is a charge against profit (i.e. revenue earned) for a particular accounting period.

(iii) Depreciation is always computed in a systematic and rational manner since it is not a sudden loss.

(iv) Depreciation is a process of allocation of expired cost and not of valuation of fixed assets.

(v) Whatever method for calculating depreciation is followed, the exact amount of depreciation can never be calculated, and it can only be estimated.

(vi) Depreciation is caused due to physical factors and functional factors.

(vii) The fundamental objectives of depreciation are – (a) to maintain the nominal capital invested in fixed assets, and (b) to allocate the expired portion of the cost of fixed assets over a number of accounting periods.

(viii) Depreciation is must, i.e. it always takes place whether the asset is carefully handled or neglected.

(ix) If the market value of a fixed asset is fluctuating, the same does not affect the amount of depreciation so made on the respective assets.

(x) Depreciation is calculated in respect of fixed assets only, i.e. plant, machinery, furniture etc.

(xi) Total depreciation cannot exceed its depreciable value or original cost where the scrap value is nil.