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What is the meaning of negative depreciation?


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Answered 2012-05-10 05:30:51

Negative depreciation, on the other hand, accounts for the opposite process of an asset gaining value over time.

Increases in ValueSome assets do not decrease in value over time, so normal depreciation does not apply. If a business owns an asset that lasts more than one year and goes up in value, it can account for the appreciation using the negative depreciation method. In contrast with depreciation, negative depreciation adds value over time. For example, if an asset goes up in value by $1,000 every year, then a negative depreciation of the same amount every year would adjust the recorded value of the asset. ExamplesAssets that could go up in value include artwork, such as paintings and sculptures. An asset may also increase in value due to importation and currency exchange rate fluctuations. For example. if the importing country's currency drops in value relative to the exporting country's currency, the asset value increases. The importer would then record the asset value at cost and add negative depreciation to increase its recorded value.
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What is the double effect of depreciation?

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What is difference between accumulated depreciation and provision for depreciation?

Accumulated depreciation shows the depreciation for specific asset which is already charged while provision of depreciation is created to charge depreciation before actual depreciation is occur.


What is the Difference between accumulated depreciation and depreciation expenses?

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)


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Depreciation expenses is for one specific fiscal year while accumulated depreciation is the sum of all depreciation expenses that’s why accumulated depreciation exceeds the depreciation if there is depreciation expense in prior year as well.


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Is it customary for the depreciation expense account and the accumulated depreciation account to be equal?

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