Why is it important for staff members to understand depreciation working in a construction company?

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readerofbooks eNotes educator| Certified Educator

There are a few key reasons why it is important to understand the idea of depreciation. Let me name a few of them. 

First, when it comes to future pricing, depreciation must be a factor. Things wear down and this is a fact of life in all areas. So, in the price of things, it is important to calculate future depreciation. There is even a tax line item that lets people deduct the fact of depreciation. 

Second, a wise construction company will also factor in future costs in view of depreciation. In other words, things will break down at times. When this happens, the construction company might be liable to fix things. As you might know, construction companies often give some sort of warranty.