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Does depreciation apply to a claim if you have Replacement Cost Coverage?
yes - you are given the depreciated amount up front - you need to make replacement and spend above the depreciated amount to make a supplementary claim for the actual replacement cost amount. this protects the insurer from overpaying the claim
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Depreciation's Affect On Cost of Capital . Please refer to the following Web site for a complete explanation on how depreciation affects the cost of capital:\n. \nhttp://e…n.wikipedia.org/wiki/Depreciation
When we use asset in business due to general usage it bears some wear and tear. Eventually it will be completely destroyed or it will complete its useful life (e.g…. due to technology improvements). So rather than write the asset off from the balance sheet in the final year we divide the cost of the asset by the number of years in which we expect to use it (to find the annual depreciation charge) and allocate the charge to all years in which we use the asset. This process is called depreciation. We use depreciation because the asset is used for earning income. That's why the average value of the asset should be allocated to all those years in which it is used. If we don't distribute the cost to all years then profit will be higher than it really was and when in the last year of asset the asset is written off we would get less profit than was actually earned. This is not in accordance with accounting principles. Also to reflect the expenses that went into production to produce the end result.A piece of asset is bought and are broken down into segments as if each is a stand alone unit that contributed to your end result. Depreciate. Think of it as regular business expense that don't get used up in one go.
Yes it is a fixed cost. Reason being that a fixed cost remains unchanged in total as the level of activity increases or decreases. Example of fixed costs include depreciation …of plant and equipment, cost of council rates and rent.
Depreciation is a sunk cost Depreciation is a sunk cost, so you should ignore it in relevatnt costing. you shoud be asking yourself the following question: can I avoid …depreciations once I have bought the asset? You should always ignore deprecition when answering a relevant costing questions. You have already incurred the cost of the asset and as a result you can not avoid deprecition, that is why it is a sunk cost. Peace Tshepo
It depends on the policy you have with the insurance company. Replacement cost phrasing should include 20% or so over the value of the home. Closely question the agent about t…he contents--like cabinets, appliances, fixtures and so on should the home become a total loss.
The cost of tail coverage is typically around $200.00 monthly. For a medical practice that has been around for a long time it will usually cost about $50,000 all together …for tail coverage.
Consistency is a concept used when applying accounting methods to a business, the business must continue to use that particular method. For an example if a company is charging… depreciation using the straight line method, they must stick with the straight line method. According to this concept,whatever accounting practices(whether logical or not) are selected for a given category of transactions,they should be followed from one accounting period to another to achieve compatibility for example:if depreciation is charged according to a particular method it should be followed year after year for the purpose of comparison. Omair shehzad
Depreciable Value = Intial Cost - Residual Value
No. Depreciation would be considered an uncontrollable cost because it is fixed
In the US, the answer depends on what depreciable assets you are talking about. Depreciation on any depreciable asset that is directly used in the production of goods is part …of Manufacturing Overhead, and therefore is a product cost, which is included in the calculation of the value of both inventory and cost of goods sold. So, depreciation on a factory building and factory equipment directly used to manufacture a product are both product costs. Conversely, depreciation on equipment that is NOT directly used in production (e.g., depreciation on office computer equipment) is NOT a product cost.
depreciation is classed as a fixed cost when using only the straight line method. reducing balancing method is classed as a variable cost.
yes, depreciation is an implicit cost. but this implicit cost is added to total costs in calculating accounting profits.
Only the total amount of a new machine is a relevant cost because this incurs in the future and incurs when a certain decision is made. The depreciation of old machines is… a sunk cost so this is an unavoidable cost. The amount for the old machine you sell is a relevant cost because you will get this amount if you sell the old machine and buy the new one.