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Accounting firm

You work for an accounting firm that provides accounting services to small businesses. A common complaint byclients is the extra costs associated with you having to perform end of period adjustments. One particular clienthas come to you asking about why you perform a number of complex calculations to record depreciation. Theygive you an example of a car they had to replace and paid $20,000 cash for that year. They think this is just anexpense of doing business and should be recorded as such.QUESTION:Outline why depreciation is required – basing your discussion on any relevant accounting standards; and any relevant definitions, concepts and assumptions from the accounting framework.

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