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Depreciation is the process of allocating the cost of a fixed asset (less residual value) over its estimated useful life in a rational and systematic manner. Depreciation can occur due to wear and tear, usage, effluxion of time, obsolescence through technology, market changes and inadequacy.
Wiki User
∙ 13y ago
Wiki User
∙ 14y agoFixed assets are long lived assets that are part of normal business operations. Other than land (which is expected to have indefinite life from an accounting perspective), all other fixed assets lose their "usefulness" to business operations over time. In order to observe the matching principle of GAAP, the cost associated with fixed assets are allocated over their useful life. For more on depreciation of fixed assets, see here .... http://vitalbusinessinfo.blogspot.com/2009/10/depreciation-of-fixed-assets.html
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Give three reasons why depreciation may occur?
because it has to be in the time to have a business you should have this kind of proposal
What are the reasons for charging depreciation on non current assets?
depreciation non current asseate
What are the types of depreciation?
There are three types of depreciation. Fixed Installment, Diminishing balance and Component Depreciation.
When would a company consider using accelerated depreciation?
There are many reasons that a company may consider using accelerated depreciation. The main reason being that by using accelerated depreciation, this would decrease their tax payments.
What are the three formulas for depreciation?
Thre formulas for depreciation are a fixed percentage, a straight line, and a declining balance method.
What are three reasons for natural selection to occur?
1. different breeding 2. evolution 3.adaptation
Can depreciation be charged on capital work in progress. Give reasons?
no depriciation is usually not charged on capital WIP
What is the amount of depreciation using the double declinging method for the second year of use for equipment costing 9000 with an estimated residual value of 600 and as estimated life of three year?
Depreciation for 1st year = 6000 Depreciation for 2nd year = 2000 Depreciation for 3rd year = 400
How are accumulated depreciation and depreciation expenses similar?
Accumulated depreciation is all of the depreciation ever 'accumulated' against the assets currently in service. It is shown on the balance sheet as a 'contra' (negative) asset, directly below the assets it relates to. Depreciation expense is the current period's depreciation of the assets currently in service. It is shown on the income (P&L) statement as an expense. Example: Business purchased a truck for $20,000 which will last 5 years. For simplicity, we'll use 'straight-line' depreciation. End of Year One: Depreciation expense on Income Statement $4,000 (1/5th of $20,000) Accumulated Depreciation on balance sheet: $4,000 End of Year Two: Depreciation expense on Income Statement $4,000 Accumulated Depreciation on balance sheet: $8,000 (both years) End of Year Three: Depreciation expense on Income Statement $4,000 Accumulated Depreciation on balance sheet: $12,000 (all three years)
How are accumulated depreciation and depreciation related?
Accumulated depreciation and depreciation are related with each other as depreciation is annual expense while accumulated depreciation is the sum of all annual depreciation expenses.
How are accumulated depreciation and depreciation expensese related?
Accumulated depreciation and depreciation are related with each other as depreciation is annual expense while accumulated depreciation is the sum of all annual depreciation expenses.
What are the three factors that contribute to the depreciation of a vehicle?
milage, interior condition, exterior condition
