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DR. Depreciation Expense XX Cr. Accumulated Depreciation - Equipment XX
Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation-Equipment, Accounts Payable, Wages Payable, Capital
Please refer to the following Web site for a complete explanation on how depreciation affects the cost of capital: http://en.wikipedia.org/wiki/Depreciation
Depreciation of manufacturing equipment is fixed cost because that cost will incurred no matter how much units produced.
Depreciation is a fixed cost because variable cost is that cost which change with the change in the production units but it doesn't put any effect on depreciation as depreciation of the equipment will remain same no matter you produce maximum number of units or produce no unit in fiscal year.
Net National product
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.
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.
DR. Depreciation Expense XX Cr. Accumulated Depreciation - Equipment XX
Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation-Equipment, Accounts Payable, Wages Payable, Capital
Please refer to the following Web site for a complete explanation on how depreciation affects the cost of capital: http://en.wikipedia.org/wiki/Depreciation
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.
What is The application of the matching principle to depreciation of plant and equipment can best be described as?
Usually depreciation is set up as a contra account to equipment. So in Assets you have an Equipment Account and a Accumulated Depreciation-Equipment Account showing up on the Balance Sheet in the Financial Statements. Keeping the accounting equation in mind, A=L+OE, credits made in the Accumulated Depreciation-Equipment Account are debited in a Depreciation Expense account which affects the Owners Equity side of the equation. This affects the Income Statement.
depreciation
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
Depreciation of manufacturing equipment is fixed cost because that cost will incurred no matter how much units produced.