You work for an accounting firm that provides accounting services to small businesses. A common complaint by clients is the extra costs associated with you having to perform end of period adjustments. One particular client has come to you asking about why you perform a number of complex calculations to record depreciation. They give you an example of a car they had to replace and paid $20,000 cash for that year. They think this is just an expense 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 dfinitions, concepts and assumptions from the accounting framework.