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What does fully funded depreciation mean?

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2009-04-23 02:12:42
2009-04-23 02:12:42

This is the amount saved to replace assets at the end of their useful life. [1]

[1] The Financial Management of Hospital and Healthcare Organizations. Michael Nowicki (2008)

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After an asset is fully depreciated, the assets and accumulated depreciation accounts are zerod together in the beginning of the next accounting period. When an asset is fully depreciated but still operates in the company, accountants usually leave the asset and its accumulated depreciation accounts in the records even after it's fully depreciated and even through next periods, just to show that this asset still exists and operates.

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Yes depreciation expense is also an example of matching concept as in this way part of fixed asset cost is apportioned to income statement and depreciation is not used in cash basis of accounting as there cash purchase is fully expensed in purchasing year.

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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.

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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.

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

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Depreciation policy is management thing that what depreciation method to use and how much depreciation to charge to each asset. Depreciation concepts are concepts which govern the depreciation process which management cannot change they are universal rules to follow depreciation that how straight line depreciation work etc.

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Please make sure the security door is fully closed.I want to make sure you fully understand the consequences of your actions.You need to be fully aware of what goes on around you.

If asset is acquired in same year of fully utilized then there is no depreciation rather full cost charged to that specific period.

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