Similarly a machine after some use is not the same as it was when new. Some wear and tear is inevitable. A time will thus come when after some years the car or the machine ceases to give any useful output. This wear and tear is the expense or the depreciation and this number of years is known as the useful life of the asset. Obsolescence means the process of becoming out of date or obsolete.
Computers are a good example of equipment going out of date very fast.
Technology in this area is making such rapid progress that what was efficient a couple of years ago is no longer so. Machines with Windows 95 became outdated when Windows 98 operating system arrived. Size of the RAM becomes outdated almost every year. The useful life of these machines, thus, is much shorter compared to other types of machines or buildings and therefore the amount of depreciation is also greater. In India two main methods of calculating the depreciation are prevalent.