Business, Management and Accounting
2 years ago

Loss in asset value impacts national income and production efficiency.

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Depreciation or Consumption of Fixed Capital

Paper Summary

Depreciation is the decrease in value of assets over time. It is like wear and tear on things like machinery or buildings. This loss in value is deducted from income to show the decrease in capital value due to using these assets for production. In some cases, depreciation is also called "Consumption of fixed capital" or "Capital consumption" in national accounts.

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