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How should depreciation be handled in a non profit budget?
Depreciation on delivery truck is period cost as it is not necessary for the making of product.
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.
Debit depreciation accountCredit accumulated depreciation
Depreciation is for a particular year (say for Year 3). Accumulated depreciation is the aggregate of depreciation from the beginning (say from Year 1 to Year 3)
How should depreciation be handled in a non profit budget?
it is necessary to provide depreciation even business is running in loses or in profit because depreciation provides fund for future and remove the burden of fund for purchasing new machinery when old machinery are broken down.
Depreciation on delivery truck is period cost as it is not necessary for the making of product.
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.
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.
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.
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.
Debit depreciation accountCredit accumulated depreciation
Depreciation is necessary because in this way the cost of asset is allocated to all those fiscal years in which that asset is used to generate revenue and if depreciation is not charged for all those years then it is against the matching concept as asset is used to generate revenue for more than one fiscal year but cost is allocated to one specific year.
Depreciation is for a particular year (say for Year 3). Accumulated depreciation is the aggregate of depreciation from the beginning (say from Year 1 to Year 3)
[Debit] Depreciation account [Credit] Accumulated depreciation
Every thing will have depreciation . depreciation is rule of nature.