The
Definition Of

Obsolescence

Obsolescence is the process of becoming out of dates before the asset physically wears out. Revenue-producing ability may also decline because of obsolescence. For example, major airlines moved from Chicago’s Midway Airport to Chicago-O’Hare International Airport because Midway’s runways were too short for jumbo jets. Similarly, many companies replace their computers long before they originally planed to do so because improvements in new computing technology make the old computers obsolete.

Share it:

More from this Section

  • Raw materials inventory
    Raw materials inventory is a general ledger account. It is also referred to as a control account because it summarizes the detailed data regarding specific inventory...
  • Account
    An account is an accounting record of increases and decreases in a specific asset, liability, or owner’s equity item. In its simplest form, an account consists of ...
  • Cost reconciliation schedule
    Cost reconciliation schedule is a schedule that shows that the total costs accounted for equal the total costs to be accounted for equal the total costs to be accounted for.
  • Continuous audit
    A continuous audit or a detailed audit, as it is sometimes called, is an audit which involves a detailed examination of the books of account at
  • Long-term liabilities
    Long-term liabilities are obligations that a company expects to pay after one year. Liabilities in this category include bonds payable, mortgages payable, long-term notes payable...
  • Job Order Cost System
    Under a job order cost system, the company assigns costs to each job or to each batch of goods. An example of a job is the manufacture of a mainframe computer by IBM...
  • Capital profits
    Capital profits are those profits which are not earned during the regular course of business or in other words which are not trading