Question: Jacky Chan and Raymond Poon are university students in Hong Kong. During an Accounting lecture, the lecturer asked them about the meaning of depreciation.
Jacky Chan said that depreciation is what happens when an asset wears out. However, Raymond Poon said that depreciation is the process of building up a cash fund to replace an asset at the end of its useful life.
Define the term 'depreciation' and discuss the two above views.