When an asset is purchased (or disposed of) at any time other than the beginning or the end of an accounting period,depreciation is recorded for part of a year so that the year of purchase or the year of disposal is charged with its share of the asset's depreciation.

Question

Quizplus · Accepted Answer

This is because when an asset is purchased or disposed of at any time other than the beginning or end of an accounting period, it has been in use for only a fraction of the year, and so it should only be charged with a fraction of its annual depreciation. This is known as prorating the depreciation.

When an Asset Is Purchased (Or Disposed Of) at Any