It is treated as expense because it uses to allocate the related assets cost portion to profit and loss account due to usage of fixed assets for revenue generation in fiscal year.
How should depreciation be handled in a non profit budget?
it should be 15 percent treated as tools and equipments
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.
i think it should be treated as an ""Expense""
Non-profit organizations should record depreciation because it is a cost of doing business. Because there are no tax advantages to the non-profit, many non-profits (NPOs) do not record depreciation. Also, because it is a non-cash expense, many NPOs do not record it. By recording depreciation, an NPO will build its equity position. If depreciation is budgeted, cash balances will increase, as there will be income to offset the expense, but there will be no cash out-flow. In the long run, the NPO will build cash reserves to replace assets, rather than having to do special fund-raising for major purchases.
The accumulated deprecation is the all the depreciation amounts should be the accumulated depreciation.
Depreciation should be treated as expense because the worth of the asset like machinery and building goes down as time goes by. This reduction in the amount cannot be collected by anyone and cannot be claimed. The company only has to bear this amount. Because of this depreciation is treated as an expense.
Depreciation is an expense. It should be charged under expense of a P&L Statement. Provision for Depreciation is the total depreciation of a particular fixed asset accumulated over the years. It should be deducted from the figure of the Fixed asset.
Depreciation is a portion of fixed asset charged to income statement due to wear and tear of assets during use in business in fiscal year that's why that wear and tear is accounted for by using depreciation.
How should depreciation be handled in a non profit budget?
First of all capital expenditure should be estimated and after that on the basis of fixed assets purchase assumption depreciation can be calculated.
it should be 15 percent treated as tools and equipments
The Sales Office is in charge of the selling of valuables of an entity. Thus, all expenses related to this office is debited to selling expenses. Furthermore, depreciation is a form of expense, and deserves a different account, but since it is related to the sales office, it is debited to selling expenses. Yes, it is a selling expense.
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.
i think it should be treated as an ""Expense""
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
Non-profit organizations should record depreciation because it is a cost of doing business. Because there are no tax advantages to the non-profit, many non-profits (NPOs) do not record depreciation. Also, because it is a non-cash expense, many NPOs do not record it. By recording depreciation, an NPO will build its equity position. If depreciation is budgeted, cash balances will increase, as there will be income to offset the expense, but there will be no cash out-flow. In the long run, the NPO will build cash reserves to replace assets, rather than having to do special fund-raising for major purchases.