Why should depreciation be written on fixed assets?

Following are the reasons of providing depreciations on fixed assets:

  • To ascertain the true profit or loss of the business in an accounting period.
  • Presentation of true financial position of the business at the end of the accounting period.
  • To ascertain the profit or loss on sale of assets.
  • To give correct information to the creditors.
  • To facilitate fixation of prices of product.