What is reversible depreciation?

La depreciación refers to the loss of value of an asset due to its use or due to the passage of time. The concept of reversible depreciation refers to the loss of value of some of the assets of a company caused by different circumstances that come from the market.

The inventories of a company's stock can suffer reversible and irreversible depreciation. Reversible depreciation could be understood as the loss of the value of any asset in relation to the value it had at the time of its acquisition. This means that the asset can recover its previous value when the market situation changes, since its inherent value has not changed, because it has neither worn out with use nor has it become obsolete.

Difference between reversible and irreversible depreciation

The difference between reversible depreciation and irreversible depreciation is based on the fact that the former occurs due to market circumstances that do not depend on the company and can return to its acquisition value. However, irreversible depreciation cannot recover its value at any time.

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