Economics

2 Is the purpose of depreciation to determine the value of equipment?

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2009-06-10 11:38:14
2009-06-10 11:38:14

No. depreciation is when objects, such as equipment, cars, media and the like lose value because of inflation, and the release of new, better equipment, making it obsolete. A good example of rapid depreciation is with cameras. There are that many new types of camera being developed all the time, that make the old models obsolete, that a brand new camera could be worth

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2009-06-10 11:38:14
2009-06-10 11:38:14

No. depreciation is when objects, such as equipment, cars, media and the like lose value because of inflation, and the release of new, better equipment, making it obsolete. A good example of rapid depreciation is with cameras. There are that many new types of camera being developed all the time, that make the old models obsolete, that a brand new camera could be worth ร‚ยฃ500 brand new, but in a years time, that could go down to ร‚ยฃ250, or less, because there will be a lot more cameras developed since then with better features, and quality pictures.

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Related Questions


Yes whenver old asset is utilized in business it is it's fair value which is used for depreciation purpose in business.

No. depreciation is compensation for a loss of value. You can make repairs or do whatever you choose with it.

Using accumulated depreciation and depreciation expense is a way that businesses can realize the true value of assets. A piece of equipment, for example, is devalued every year by the process of amortizing the asset. This in turn is recorded as depreciation and depreciation expense.

depreciation -- Decline in the value of a currency, financial asset, or capital good. When applied to a capital good, depreciation usually refers to loss of value because of obsolescence, wear, or destruction (as by fire or flood). Book depreciation (also known as tax depreciation) is the depreciation that the tax code allows businesses to deduct when they calculate their taxable profits. It is typically faster than economic depreciation, which represents the actual decline in the value of the asset. Both measures of depreciation appear as part of the national income and product accounts.another definition...depreciation -- Decrease in the value of equipment from wear and tear and the passage of time. Depreciation on business equipment is generally deductible for tax purposes.another definition...depreciation -- the decline in the dollar value of an asset over time and though use. The amount of annual depreciation may be computed differently for tax purposes than the actual decline in value.

To determine the salvage value of farm equipment for financial purposes, such as taxes, you may need to have it appraised. An appraiser needs to look at the equipment and determine what it is worth for resale as salvage.

Answer:Equipment is an asset and is presented on the debit side of the balance sheet. As the equipment is used over the economic lifetime, the value of the asset is reduced, which is called depreciation (expense). Depreciation expense is included in the income statement.

All equipment owned by a business should be listed on the corporation's income tax return each year. This page of the report is called the Depreciation Schedule. Each year the taxpayer should report any new equipment purchased and also tell his accountant which items of equipment were sold or disposed of by the owner. The corporation's accountant increases the depreciation each year to offset income and thereby reduce taxes. The depreciation amount taken each year is usually higher than the actual physical depreciation occurring due to weather and use. To determine the accumulated depreciation on a piece of equipment, look at the last tax return available to see what the number is on the Depreciation Schedule. The actual value of the equipment sold will be higher than the Purchase Price New minus the Accumulated Depreciation. A good rule of thumb would be to add back 1/2 of the accumulated depreciation to get a ball-park idea of the fair market value. Better yet - have the equipment appraised by a Certified Machinery & Equipment Appraiser (CMEA). For more information on this subject, go to www.nebbinstitute.org. An interesting and helpful article on farm equipment that discusses depreciation, recaptured depreciation and capital gains tax related to the sale of equipment can be found at www.extension.iastate.edu/Publications/PM1450.pdf. Paul Klinge, CBI, CBC, CSBA The Lincoln Group, Inc. Waverly, Iowa 319-352-0132 Business Transfer Specialists Mergers & Acquisitions Business Valuations Machinery & Equipment Appraisals

When you buy a plant or equipment, it will lose value over time - it's breaking down or it's not as efficient or the such; this gradual decline in worth of the capital is depreciation.

Formula for calculating depreciation value Annual depreciation value = (Total cost - salvage value (if any) ) / useful life

To calculate a car's depreciation value one must determine the residual percentage of the vehicle then find the original MSRP on the vehicle. One must then multiply the residual percentage by the original MSRP, the outcome will be the depreciated value of the vehicle.

In the US, the answer depends on what depreciable assets you are talking about.Depreciation on any depreciable asset that is directlyused 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 NOTdirectly used in production (e.g., depreciation on office computer equipment) is NOT a product cost.

Depreciation is an incentive for investment in equipment. It encourages businesses to buy equipment that will be used to provide employment.Depreciation is effectively a tax credit. It reduces the profits and therefore the taxes due.Depreciation cost is a term used to account for the loss of value in an item over time. There are four methods of depreciation that are approved for use under the generally accepted accounting principles or GAAP. The most commonly used methods are straight-line depreciation, declining balance and percentage of use.

the expired cost of fixed plant assets such as land, building, equipment, furniture and fixtures and automobile etc.., after a year is known as depreciation. it means that if you depreciate the value of any fixed assets you will be able to estimate its life for the future use..it can help you to estimate the total revenue earned by using that assets.

The calculating depreciation helps one to loss value in the asset.

In accounting, depreciation is an allocation of a previous expenditure, while in economics depreciation represents a decline in current value.

Depreciation is calculated on the value of assets. This stupidity of calculating depreciation as per accounting and as per tax exists in India.

is it the value of what remains after depreciation from an asset

It is the depreciation amount that is not covered by the policy. Polices that are based on ACV (Actual Value), rather than RC (Replacement Cost) do not cover value lost due to depreciation.

Cost of depreciation assets and accumulated depreciation is same as accumulated depreciaton calculates how much depreciation is charged till date while remaining is current book value of assets.

Depreciable assets include those assets that are capitalized i.e. not expensed. Examples include buildings, capital equipment, and the like. Depreciation allows someone to invest in these items and not subtract the full value of that investment in the first year, since the investment retains value over the years. Book depreciation is different from tax depreciation which is different from actual depreciation. Items that are commonly expensed are advertising expense, software expense, and research and development expenses (sometimes). Assets that are neither expensed nor depreciated, but just sit on the balance sheet, include raw land and goodwill.

A good way to determine the market value of anything is to look on eBay at closed auctions to see what they sold for.

Depreciation is a charge to the Profit and Loss account or Income statement that shows the charge to a fixed asset (or group of fixed assets) in that period. Accumulated Depreciation is the total depreciation charged to that fixed asset since it was purchased and is shown in the balance sheet reducing the value at purchase to the value at which it is currently held (its Net Book Value).


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