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GDP

Economics

In GDP depreciation also add Here depreciation I can't understand why we add

Nivetharaman Raman

CA Inter

★ 11K+

23-Feb-21 02:31

324

Answers (1)

Depreciation isn't included in the calculation of GDP. It's included in Net Domestic Product (NDP), where it subtracts from the total. Depreciation is the amount of money that it lost due to the wear and tear on its machines which are used for producing products to be sold. (Business income) Gross domestic product = Employee Compensation + (Indirect taxes - subsidies) Net operating surplus on businesses + Depreciation (or Capital Consumption Allowance)