Depreciation is good because it allows companies to write something off as a loss. If a company has a piece of equipment that costed $5,000 an can depreciate over a five year period, the company can write off a $1,000 loss every year for five years. Therefore, if a company makes 10,000 dollars a year and is allowed to have a depreciation expense of $1,000 then they only get taxed on $9,000.
Using accumulated depreciation and depreciation expense is a way that businesses can realize the true value of assets. A piece of equipment, for example, is devalued every year by the process of amortizing the asset. This in turn is recorded as depreciation and depreciation expense.
http://en.wikipedia.org/wiki/Depreciation#Straight-line_depreciation
the normal balance of accumulated depreciation is "credit"
Depreciation expense is neither an asset or liability. It is an expense.
is depreciation expense a non-cash expense
depreciation
To learn about asset depreciation, you should go to en.wikipedia.org/wiki/Depreciation. Another good site is taxguide.completetax.com/text/Q14_2900.asp
There is a free trial for depreciation calculation program from BNA Software.
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 -- Decline in the value of a currency, financial asset, or capital good. When applied to a capital good, depreciation usually refers to loss of value because of obsolescence, wear, or destruction (as by fire or flood). Book depreciation (also known as tax depreciation) is the depreciation that the tax code allows businesses to deduct when they calculate their taxable profits. It is typically faster than economic depreciation, which represents the actual decline in the value of the asset. Both measures of depreciation appear as part of the national income and product accounts.another definition...depreciation -- Decrease in the value of equipment from wear and tear and the passage of time. Depreciation on business equipment is generally deductible for tax purposes.another definition...depreciation -- the decline in the dollar value of an asset over time and though use. The amount of annual depreciation may be computed differently for tax purposes than the actual decline in value.
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 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.