What is negative depreciation in regard with fixed assets?

Depreciation is a common accounting concept that helps adjust the value of a deteriorating asset over time as it becomes less efficient. A business can depreciate an asset with an expected useful life of more than one year. Negative depreciation, on the other hand, accounts for the opposite process of an asset gaining value over time.

Depreciation gradually reduces the recorded value of an asset until it becomes worthless at the end of the useful life. In some cases, the asset retains some value at the end of its useful life.

Some assets do not decrease in value over time, so normal depreciation does not apply. If a business owns an asset that lasts more than one year and goes up in value, it can account for the appreciation using the negative depreciation method. In contrast with depreciation, negative depreciation adds value over time.

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