Depreciation refers to the gradual reduction in the value of a fixed asset due to factors such as wear and tear, passage of time, technological changes, obsolescence, or continuous use. In store operations, depreciation is important because retail stores use various fixed assets such as furniture, display racks, shelves, computers, billing machines, air-conditioners, refrigerators, vehicles, lighting equipment, and other store fixtures. Since these assets provide benefits over several years, their cost should be allocated systematically over their useful life. The amount charged as depreciation each year is treated as an expense and helps in determining the true operating cost and profit of a retail store. There are several methods of calculating depreciation. The selection of a method depends on the nature of the asset, its expected pattern of use, useful life, and accounting policy of the organisation. The Straight-Line Method is one of the simplest and most widely used methods of calculating depreciation. Under this method, an equal amount of depreciation is charged every year throughout the useful life of the asset. The depreciable amount is calculated by subtracting the estimated residual or scrap value from the original cost of the asset. The formula is: Annual Depreciation = (Cost of Asset − Residual Value) ÷ Useful Life For example, suppose a retail store purchases display equipment for ₹1,00,000, expects a residual value of ₹10,000, and estimates its useful life at five years. Annual depreciation will be ₹18,000. The same amount will be charged in each of the five years. This method is suitable for assets that provide approximately equal benefits every year, such as store furniture, shelves, office equipment, and certain fixtures. Its major advantage is simplicity and consistency. However, it may not accurately reflect the actual consumption of an asset when the asset is used more heavily during some years than others. The Written Down Value Method, also known as the Diminishing Balance Method or Reducing Balance Method, calculates depreciation at a fixed percentage on the asset's book value at the beginning of each year. Unlike the straight-line method, the amount of depreciation decreases every year because the book value continuously declines. The formula is: Depreciation = Opening Book Value × Depreciation Rate For example, if a computer system costs ₹1,00,000 and depreciation is charged at 20% per year, depreciation in the first year will be ₹20,000. The book value becomes ₹80,000. In the second year, depreciation will be ₹16,000, calculated on ₹80,000. In the third year, depreciation will be ₹12,800, calculated on ₹64,000. This method is appropriate for assets such as computers, electronic billing systems, and technological equipment because these assets often lose more value during the early years due to technological changes and obsolescence. It also reflects the fact that repair and maintenance expenses may increase as an asset becomes older. The Sum-of-the-Years'-Digits Method is an accelerated depreciation method. Under this approach, a larger amount of depreciation is charged in the