Does Depreciation generate funds for replacement of Assets ?

Yes. When you charge depreciation, you are essentially setting aside a part of the profits every year during the lifetime of the existing asset, which means that this portion of the profits is retained and accumulated without being distributed to the shareholders as dividend. Thus at the end of useful life of the existing asset, you'll have some funds to replace the asset.

yes when we make provision for depreciation a certain amount is accumulated to be used at the time of purchase of new assets