Question

Difference between capital loss and depreciation

Answer 1

The three differences between depreciation and capital loss are as follows:

Depreciation

1. It refers to the fall in the value of fixed assets due to normal wear and tear, and due to the passage of time or outdated technology.
2. Provisions are made for the replacement of assets as it is an expected loss.
3. It does not hamper the production process.

Capital loss

1. It refers to the loss in value of the fixed assets because of them being outdated.
2. No such provisions are made in the case of capital loss, as it is an unexpected loss.
3. It hampers the production process.