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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Answer \n. \nWhen 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 de…preciations 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
Most (not all) dwelling coverages have an inflation protection on them now, which would rebuild the structure in a total loss, this depends on the form etc. If you policy is a…n 'actual cash value' settlement, then the amount is determined by the replacement cost (now) less depreciation. If you would like more assistance, please provide specifics.
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.
Depreciable Value = Intial Cost - Residual Value
If you want to collect the depreciation your insurance company withheld from your claim payment you must make the repairs to your home. After you make the repairs contact your… insurance company and they should issue a check for the depreciation.
It lowers your taxable income and therefore lowers your taxes . You are going to have to pay taxes on all depreciation "allowed or allowable" when you sell the property, so… you might as well take advantage of it.
Depreciation is that amount orpart of full cost of fixed asset which is allocated to specific fiscal yearduring which any asset is used to generate revenue.
Relevant to what? Depreciation is an accounting contrivance to diminish taxable income.
Yes depreciation is fixed cost because it do not vary with the volume of production and remained fixed whether any production or not.
Depreciation can be either a direct cost or an indirect cost, or it can be both direct and indirect. Let's illustrate this with the depreciation of a machine used in Departme…nt 23 of a manufacturer. The depreciation on that machine is a direct cost for Department 23 . It is direct because it is traceable to Department 23 without any allocation. The depreciation of this same machine will be an indirect cost of the products manufactured with that machine. It is indirect because the depreciation is allocated to the products. Perhaps the machine in Department 23 has depreciation of $50,000 per year (cost of machine of $500,000 divided by 10 years of useful life). The $50,000 of annual depreciation is then assigned or allocated to products based on the number of hours that products use the machine. For example, if the manufacture expects 20,000 machine hours of use in the current year, then it assigns or allocates $2.50 ($50,000/20,000) per machine hour to each product using the machine. If Product #189 requires one hour of this machine's time, Product #189 will have $2.50 as part of its indirect costs. Indirect manufacturing costs are also referred to as manufacturing overhead, factory overhead, or burden.
Yes. Under some circumstances the insurance company would "absorb" the deductible if the claim for that particular line of coverage exceeded that policy limit. Also, there are… some policies out there that do not have a deductible if it is "scheduled personal property", e.g. Rolex Watch, Musical Instruments, Oriental Rugs.
Depreciated value is usually called actual cash value on an insurance policy. This takes a formula based on the type of item that you are claiming and devalues it by a certain… percentage every year. If an item is older then it will not have very much value. I would always want replacement cost coverage, this would pay to replace your property at today's prices.
Only depreciation for all those fixed assets whichdirectly involve in manufacturing of production volume is part of direct costwhile all other depreciation is not part of dire…ct cost and included inindirect cost classification.