When a company procures an asset they need to use, by placing a purchase order, we do the capitalization of the assets. Once an asset has been capitalized and the company physically uses the asset, we calculate the depreciation of that particular asset on a routine basis. Until the time the asset is in use, we continue to keep depreciating it for its use.
In certain cases, it can also happen that the asset gets disposed of. For example, if you have an asset with an eight-year lifespan, the asset may get disposed of in the eighth year or earlier in the seventh year. Generally, this is one use case that typically happens with every company.
The most demonstrable feature is the asset creation form, which is quite informative. It has a provision to capture almost every bit of information pertaining to that asset.
