This topic focuses on calculating and recording of depreciation in the subsidiary books with the subsequent posting to the ledger. It will also highlight the acquisition and disposal of assets using different methods of depreciation. Depreciation is an imputed expense (does not involve the outflow of cash). It is the amount by which fixed assets decreases in value. Fixed Assets (except Land and Buildings) lose value due to usage (wear and tear). The useful life of each asset will be considered to determine the replacement value.