Meaning
A fund created to replace assets as they wear out over time.Definition
A Depreciation Fund is a dedicated reserve set aside periodically by a business to accumulate funds for the future replacement of its depreciating fixed assets. This ensures capital is available when needed.Purpose and Function
Its primary purpose is to ensure capital is available when assets need replacing, preventing a sudden financial burden and maintaining operational continuity. It systematically allocates resources for asset renewal.Key Aspects
It helps manage asset replacement costs and reflects systematic financial planning. It’s an accounting method to provide for asset wear and tear.Author
