Comparing depreciation and obsolescence based on various factors

 Comparing 

depreciation and obsolescence based on various factors:


Factor Depreciation Obsolescence
Loss of Value Gradual loss due to wear and tear, age, and use. Can be sudden or gradual, resulting from external factors like technological advancements or changes in market demand.
Condition Related to the physical condition of the asset. Related to external factors impacting the asset's relevance or utility.
Nature of Impact Internal factors like wear and tear. External factors like technological changes or shifts in market demand.
Age Accumulates over the asset's useful life. May occur at any stage of an asset's life, especially when it becomes outdated or irrelevant.
Method to Find-out Calculated using methods like straight-line, declining balance, or units of production. Requires ongoing analysis of market trends, technological advancements, and other external factors affecting the asset.

 


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