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Depreciation do not increase or decrease the cash as it is just the presentation of actual cost of assets through income statement actual cash was already reduced when asset was purchased.

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What does depreciation expense mean?

It is assumed that long lived tangible assets reduce in value over time. This reduction in value is hard to quantify economically, but is an acceptable reduction in income when calculating income tax. This reduction in value due to use or age of a long lived asset is called depreciation. The reduction or offset against income is called depreciation expense. Usually this is not an expense that requires the immediate expenditure of cash, but is called a non-cash expense deducted from income before calculating income tax. Generally the depreciation expense amounts are calculated from formulas promulgated by tax regulators to either model actual economic depreciation, or to motivate certain economic behaviors by allowing favorable tax treatment for the favored activities.


What you mean by cash?

Cash profit means profit after tax plus depreciation.


What are the benefits of accelerated depreciation?

Presumably you mean when doing tax accounting. Depreciation is an expense. Expense lowers income, which lowers the tax payable. However, as the same amount of depreciation will be taken on an asset overall, accelerated only meaning a larger amount is taken quicker...in latter years the benfit reverses...that is the amount of book (or non accelerated depreciation) is higher than the accelerated one, and less tax expense is received. hence, the difference is to lower taxable income at first and increase it later...providing cash (less tax) sooner, and requiring more cash later. So the time value of the cash savings sooner is the real benefit.


What do you mean by cash profit?

Cash profit means profit after tax plus depreciation.


What does OIBDAN mean?

Operating Income Before Depreciation and Amortization of Non-Cash charges. I am not sure about the N, though.

Related Questions

What does depreciation expense mean?

It is assumed that long lived tangible assets reduce in value over time. This reduction in value is hard to quantify economically, but is an acceptable reduction in income when calculating income tax. This reduction in value due to use or age of a long lived asset is called depreciation. The reduction or offset against income is called depreciation expense. Usually this is not an expense that requires the immediate expenditure of cash, but is called a non-cash expense deducted from income before calculating income tax. Generally the depreciation expense amounts are calculated from formulas promulgated by tax regulators to either model actual economic depreciation, or to motivate certain economic behaviors by allowing favorable tax treatment for the favored activities.


What you mean by cash?

Cash profit means profit after tax plus depreciation.


What do you mean by cash?

Cash profit means profit after tax plus depreciation.


What are the benefits of accelerated depreciation?

Presumably you mean when doing tax accounting. Depreciation is an expense. Expense lowers income, which lowers the tax payable. However, as the same amount of depreciation will be taken on an asset overall, accelerated only meaning a larger amount is taken quicker...in latter years the benfit reverses...that is the amount of book (or non accelerated depreciation) is higher than the accelerated one, and less tax expense is received. hence, the difference is to lower taxable income at first and increase it later...providing cash (less tax) sooner, and requiring more cash later. So the time value of the cash savings sooner is the real benefit.


What are benefits of benefits of depreciation?

Presumably you mean when doing tax accounting. Depreciation is an expense. Expense lowers income, which lowers the tax payable. However, as the same amount of depreciation will be taken on an asset overall, accelerated only meaning a larger amount is taken quicker...in latter years the benfit reverses...that is the amount of book (or non accelerated depreciation) is higher than the accelerated one, and less tax expense is received. hence, the difference is to lower taxable income at first and increase it later...providing cash (less tax) sooner, and requiring more cash later. So the time value of the cash savings sooner is the real benefit.


What do you mean by cash profit?

Cash profit means profit after tax plus depreciation.


What does OIBDAN mean?

Operating Income Before Depreciation and Amortization of Non-Cash charges. I am not sure about the N, though.


How does a company have income but take in less cash that it spends?

Income is all the money a company takes in (hence the name) expense is all the money a company spends profit is income - expense. just because expense > income doesn't mean there is no income. It means there is no profit.


Depreciation is a process of cost allocation and not valuation What does this mean?

Depreciation spreads the cost of a fixed asset over the useful life of that asset so a portion of that cost is recognized as an expense in each period that the asset is in service. The original cost, less the accumulated depreciation is the net book value of the asset. The net book value may not represent the actual market value of the asset. Depreciation is not concerned with the market value but rather the value of the contribution that the asset makes to the business.


What is book depreciation mean?

The depreciation rate for accounting may be different than that of taxation. The depreciation as per books of accounts may often be termed as book depreciation while that calculated under tax law is termed as tax depreciation.


What does depreciate means?

Depreciation means the reduction price of the fixed assets by consumption. It is an expense for business. In layman's terms, as regards the depreciation of a car, for instance, depreciation occurs when something loses value over time.


Does the fact that the unadjusted trial balance in is balanced mean that there are no errors in the accounts?

No. There could be omissions (for example, if you forgot to make a journal entry for depreciation) or incorrect amounts posted (such as using the wrong interest rate to calculate and accrue interest expense).