Consumption of Fixed Capital

Consumption of Fixed Capital refers to the amount of fixed assets used up, during the period under consideration. It  is the decline, during the course of the accounting period, in the current value of the stock of fixed assets owned and used by a producer as a result of physical deterioration, normal obsolescence or normal accidental damage. It should be estimated on the basis of the stock of fixed assets and the probable average economic life of the different categories of those goods. Consumption of Fixed Capital represents a compensation for the loss of value of fixed assets to an enterprise.