Depreciation on fixed assets is added back to net income for preparing cash flows from operating activities because there is no actual cash flow involved in depreciation transaction.
Yes depreciation is fixed cost because it do not vary with the volume of production and remained fixed whether any production or not.
Accumulated depreciation is contra account to specific fixed asset to calculate the depreciation so that's why accumulated depreciation is shown in liability side or as a deduction from fixed asset.
Fixed asset depreciation schedule shows the calculation of yearly depreciation expense which is scheduled to be charged to income statement for all fixed assets and the total amount of depreciation applicable to specific income statement of business.
There are three types of depreciation. Fixed Installment, Diminishing balance and Component Depreciation.
[Debit] Depreciation expense[credit] fixed asset.
Unavoidable depreciation factors like age of the object.
Depreciation is charged to fixed assets so that cost of fixed assets can be allocate to all those fiscal years in which that fixed assets is used.
depreciation of fixed assets reduces the profit as depreciation is also an expense.
Depreciation on Fixed Asset (Furniture, Building) are considered as Non-Current Assets
(Debit) Depreciation account xxxx (Credit) Fixed asset account xxxx
In sum of year digit depreciation method depreciation is charged based on total number of years fixed assets is usable in business instead of using any percentage or fixed amount of depreciation.
on Fixed Assets
According to my text book, depreciation is a Fixed cost
Land is the only fixed asset which has no depreciation charge because land does not depreciate it's value.
if fixed assets are properly maintained depreciation is unnecessary.do you agree
depreciation fixed assets means to allocate the cost of fixed assets to all those fiscal years in which assets is used for revenue generation.
definitely the worth of a fixed asset decreases after charging depreciation on it, because the efficiency of the fixed asset decreases with the every next financial year.
Depreciation is a fixed cost as it does not vary with variation in production volume and even charged when there is no production at all.
No. Depreciation would be considered an uncontrollable cost because it is fixed
Debit depreciation expenseCredit fixed asset
Depreciation of a Fixed Asset is always carried on the Balance Sheet in the Accumulated Depreciation Account (contra-asset). It is never deducted from the Fixed Asset.One reason for the Accumulated Depreciation account is that eventually, individual assets will be fully depreciated and their net values will be zero. If the depreciation were deducted from the asset, it would "fall off" the balance sheet. The accumulated depreciation account allows the assets to remain at book value in the asset account to maintain their visual presence on the books.The depreciation entry debits depreciation expense and credits accumulated depreciation.
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).