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depreciation means allocating the cost of an asset over its life time. most people think that it is because to set aside certen amount of money step by step to purchase at the end of the period . it is wrong. we depreciate asset because we must have a record for the benefit received.
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Explained the concept of depreciation and amortization?
Depreciation is the wear and tear charge allocated to specific fiscal year thorugh income statement for related fixed tangible assets while amortization is same as depreciation just it is done for intangible fixed assets.
Fixed assets reduces profits in balance sheet?
depreciation of fixed assets reduces the profit as depreciation is also an expense.
Depreciation is provided on?
on Fixed Assets
What is depreciation of fixed assets?
Depreciation is the method of allocation of part of cost to all fiscal years to which fixed asset is used for revenue generation to income statement
Depreciation on Fixed Asset is a operating expenses or not?
Depreciation on Fixed Asset (Furniture, Building) are considered as Non-Current Assets
Which fixed asset their no charge depreciation?
Land is the only fixed asset which has no depreciation charge because land does not depreciate it's value.
What is a fixed asset equipment depreciation schedule?
It is the schadule to show how fixed assets will depreciate in their useful life and show all information according to useful life the depreciation expense charge to income statement and to dispose off them in the end.
What is meant by the term fixed asset depreciation?
The depreciation to fixed asset ratio measures how diligently the company is replacing its old fixed assets with replacements. Companies will acquire fixed assets such as new buildings or machinery with hopes of gaining sales over the lifespan of those assets.
What is the systematic allocation of a fixed assets cost to expense?
Depreciation.
Which is the only assets which doesn't charge depreciation?
Land is not subject to depreciation because value of land doesnot depreciate rather appreciate and nobody knows the exact disposal time of land.
Why do you charge depreciation?
You need to see the bigger picture first i.e. why do we do accounting? The reason is to know the true and fair financial condition and progress of the business. So, how does depreciation helps us to see the true and fair view of the business? Depreciation is charged on fixed assets. Fixed assets last for years and usually accounts are prepared periodically usually a yearly. Fixed assets loose value with time and usage and a ton other things. So that loss of value need to be accounted for in order to see the true and view of the business. And depreciation is not a charge actually its a notional (presumed) charge because depreciation does not cause any outflow of cash. Its a process of allocating the investment made on the purchase of a fixed asset. I hope this answers your question.
What are the advantages and disadvantages of fixed assets?
One of the advantages of fixed assets are that over the period of the fixed asset, the total burden of depreciation and repair costs are disproportional over the effective life of the asset. One of the disadvantages is that the depreciation is not a suitable method for assets like plants and machinery as depreciation is constant while the repairs on such assets will be heavier in later years.
