IMPAIRMENT OF ASSET’S VALUE – DEPRECIATION OF TANGIBLE ASSETS & AMORTIZATION OF INTANGIBLE ASSETS - OVERVIEW

Abstract

In real estate economics, valuation of asset fixes transfer value. Valuation is simply the land value component added with infrastructure built over on this particular plot. The infrastructure may be a building or any other commercial structure. In the case of serviced buildings, the component of depreciation will come in to picture. According to type of assets, it may be tangible or intangible. Physical depreciation means loss in dimension due to continuous use or any other physical alteration. Depreciation is also termed as loss of value of the sum invested. Depletion is one among such depreciation as it is called as depletion of value invested or available. Alternately, in case of intangible assets like copy right, patent right, brand value etc, the values may hike or low down according to market. In physical assets, depreciation is assumed to be occurring at a uniform rate and gradually increases until life of asset ends. In practice, there is no gradual wear and tear and the rate of depreciation will never be uniform. The authors realize that the level of depreciation, in practical utility, is of minimum magnitude at initial stages and expands till complete utilization. The assets being employed in the full scale of utilization shows continuous loss of capital sum invested, which depends on how best or worst the asset utilized. The benefit out of this analysis helps to find out the depreciated value at any point of time, so that any renovation or refurbishment could be undertaken.