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Topic: Depreciation

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In the News (Wed 21 Aug 19)

Depreciation, which is the allocation of the expense that reflects the "using up" of capital assets employed by the entity, is subject to a number of different calculation approaches.
Accordingly, the depreciation change for the year could be understated to the extent the lower market value, when multiplied by the "standard" or "rule of thumb" percentage being used, produced a result that was lower than the true, economic depreciation of the capital assets in that year.
Depreciation expense is a significant component of total expense on most farm operations, and it is therefore important that it be treated in a manner that will provide results that are as consistent as possible and that allow for reasonable comparative analysis.
www.ffsc.org /guidelines/depreciation.htm   (1390 words)

Depreciation is the accounting of the deterioration of the physical and functional utility of a fixed asset due to usage and time.
Depreciable life of the asset is another important variable in depreciation analysis.
Depreciation is also done for amortizing the cost of depleting natural resources.
coen.boisestate.edu /mkhanal/deprecia.htm   (413 words)

 Depreciation   (Site not responding. Last check: 2007-10-06)
Under MACRS an asset's depreciable basis is multiplied by a percentage obtained from one of the IRS tables to determine the depreciation deduction.
Depreciable basis is the assets original basis for depreciation, less any amount deducted under the Section 179 election to expenses assets.
Under this method the annual depreciation deduction is calculated by dividing the depreciable basis of the asset by the number of years in the recovery period.
www.timbertax.org /getstarted/depreciation/depreciation.asp   (1620 words)

 Classic Depreciation   (Site not responding. Last check: 2007-10-06)
Depreciation is a systematic method of allocating the cost of an asset over its useful lifetime.
The sum of digits method is also an accelerated method: the depreciation is expressed as a fraction with the sum of digits from 1 to the number of years as the denominator and the number of years in reverse order as the numerator.
The depreciation for the first year equals the annual deposit needed for a sinking fund to accumulate at the given rate to an amount that equals the depreciation base.
www.paranzasoft.com /help/pages/caDepClassic.html   (561 words)

 Depreciation - Wikipedia, the free encyclopedia
Depreciation in accounting is often mistakenly seen as a basis for recognizing impairment of an asset, but unexpected changes in value, where seen as significant enough to account for, are handled through write-downs or similar techniques which adjust the book value of the asset to reflect its current value.
Depreciation and its related concept, amortization (generally, the depreciation of intangible assets), are non-cash expenses.
Depreciation recognized for tax purposes will, however, affect the cash flow of the company, as tax depreciation will reduce taxable profits; there is generally no requirement that treatment of depreciation for tax and accounting purposes be identical.
en.wikipedia.org /wiki/Depreciation   (2143 words)

 Must I claim depreciation on my rental property?
Depreciation is calculated on the portion of your investment that represents the cost of the building.
Depreciation on residential real property is computed on a straight-line basis over 27.5 years using a midmonth convention.
Depreciation recapture is taxed at a maximum rate of 28 percent, but can be less, depending on your level of income.
www.bankrate.com /brm/itax/tax_adviser/20050601a1.asp   (386 words)

For all depreciation calculations except capitalized and expensed, the first year's depreciation is adjusted using the first-year convention.
Month-- The first year's depreciation is adjusted by the number of months from the middle of the month of purchase, to the last day of the year, divided by 12.
Quarter Year-- The first year's depreciation is adjusted by the number of quarters from the middle of the quarter of purchase, to the last day of the year, divided by 4.
www.turtlesoft.com /GSManual/deprec.htm   (919 words)

 Depreciation   (Site not responding. Last check: 2007-10-06)
By definition, depreciation is an accounting process of allocating the cost of a capital asset over the period of its useful life.
Depreciation takes into account the decrease in the service potential of an asset, usually as a result of such things as wear and tear, deterioration by natural elements, or obsolescence caused by technical changes.
Established companies, on the other hand, benefit from accelerated depreciation, where expenses are high in the asset’s early years, creating lower profits which means less for the tax man. This strategy coincides with accounting’s purpose to legally tilt a company’s financial well being in its direction, not the government’s.
www.igin.com /Irrigation/depreciation.html   (1778 words)

 Small Business Taxes & Management
Thus, the depreciation is $2,000 (20% of $10,000).
The rate is 14.29% and the depreciation for the first year is $714.50 (14.29% of $5,000).
For the lathe the rate is 27.55%; the depreciation is $2,066.25 (27.55% of $7,500).
www.smbiz.com /sbrl012.html   (1157 words)

 Tax Talk: SUVs and bonus depreciation
Bonus depreciation, intended to generate investment in new property (and possibly the creation of new, overseas perhaps, jobs) by businesses is a special increased allowance for property acquired after May 5, 2003, and before Jan. 1, 2005.
Bonus depreciation is computed without regard to the profit of the business and can be claimed on any cost that was not written off through Section 179 expensing.
Assuming the property was new and considered five-year property, the 50 percent bonus depreciation would be $10,000, leaving $10,000 subject to the traditional allowance of 20 percent (for five-year property) or an additional $2,000.
www.bankrate.com /brm/itax/tax_adviser/20040928a1.asp   (538 words)

 Depreciation | Online Accounting Course
In effect depreciation is the transfer of a portion of the asset's cost from the balance sheet to the income statement during each year of the asset's life.
This principle requires that the Depreciation Expense reported on the income statement, and the asset amount that is reported on the balance sheet, should be based on the historical (original) cost of the asset.
The most common method of depreciating assets for financial statement purposes (as opposed to the method used for income tax purposes) is the straight-line method.
www.accountingcoach.com /online-accounting-course/11Xpg01.html   (883 words)

 IFRS: Depreciation
Depreciation reduces an asset's depreciable amount to its residual value at the end of its useful life.
Depreciation is recognised as a charge in the income statement unless an IFRS requires or permits it to be included in another asset's carrying amount [IAS16R.48].
The accumulated depreciation at the beginning and end of the period should be given for each class of assets, together with the charge for the period [IAS16R.73].
www.pwc.com /extweb/service.nsf/docid/5e8ae59c828f99758025714d003942d8   (698 words)

 depreciation. The Columbia Encyclopedia, Sixth Edition. 2001-05
In the straight-line method, depreciation is simply seen as a function of time; the cost of the asset, minus its value as scrap, is divided by an estimate of its life.
The opposite is true of rights of limited duration, such as copyrights and leaseholds, whose value depreciates most quickly as their date of expiration approaches.
Depreciation of money is brought about by a decline in the price of a particular currency in terms of other currencies, thereby lowering the foreign exchange value of the first currency.
www.bartleby.com /65/de/deprecia.html   (261 words)

 Depreciation, Amortization, Depletion
Two commonly used accelerated depreciation methods are the declining balance method and the sum-of-the-years-digits method.
The important thing to remember is that depreciation expense for tax purposes is frequently calculated using a different method than for financial reporting purposes.
In other words, SYD depreciation expense will not be as high as DDB depreciation at the beginning of an asset's life and will decline more gradually.
www.csun.edu /~hfact004/Depreciation.html   (422 words)

 CCH Business Owner's Toolkit | Capital Assets and Depreciation
At the end of each year, you could subtract all depreciation claimed to date from the cost of the asset, to arrive at the asset's "book value," which would be equal to its market value.
The following table compares the depreciation amounts that would be available under these two methods, for a $1,000 asset that's expected to be used for five years and then sold for $100 in scrap.
For example, you can't choose to depreciate your computer over three years, when the IRS mandates a five-year period, even though you may know your particular computer will be obsolete and replaced within three years.
www.toolkit.cch.com /text/P07_2900.asp   (932 words)

 balance sheet - fixed asset depreciation
A depreciation method is required to allocate, in a systematic way, the total amount to be depreciated between each accounting period of the asset's useful economic life.
For such assets, the reducing-balance method of depreciation would be appropriate insofar as it matches the depreciation expense with the pattern of benefits.
It is simply the allocation of the total depreciation charge between accounting periods that is affected by the choice of method.
www.tutor2u.net /business/accounts/assets_fixedassets_depreciation.asp   (716 words)

 Business income tax - Depreciation
Depreciation allows for the wear and tear on a fixed asset and must be deducted from your income.
Land is a common example of a fixed asset that cannot be depreciated.
You do not have to use the same depreciation method for all your assets, but you must use whatever method you choose for an asset for the full year.
www.ird.govt.nz /business-income-tax/depreciation   (287 words)

 Understanding Depreciation   (Site not responding. Last check: 2007-10-06)
Depreciation is odd because it’s the most abstract area of vehicle ownership costs.
In fact, depreciation doesn’t really hurt until years after your purchase, when it’s time to sell or trade in your car—then you discover you just “paid” $12,000 for the privilege of owning what was once a $25,000 car.
Depreciation can become even more important when evaluating how good of a lease offer you are getting, because the payments are based on the depreciation costs they are quoting.
www.intellichoice.com /carBuying101/UnderstandingDepreciation   (2069 words)

 Depreciation software that calculates tax schedules for fixed assets and produces tax form 4562.   (Site not responding. Last check: 2007-10-06)
Current tax rules for depreciation are built in, to guide you through the process of adding assets to meet federal requirements.
Depreciation 4562 was created for the tax preparer that needs to complete federal tax reporting, but doesn't need the expense and complexity that most depreciation applications have.
All depreciation and amortization methods required for federal tax reporting are included in an easy to use calculator format.
www.microtechware.com   (321 words)

 RV Value -- Buying a Used RV
DEPRECIATION - Starting with MSRP the depreciation is 30% driving it off the lot, another 10% at the end of the first year, and 6% for each year following.
Evaluating depreciation as related to value means you have to consider the yearly depreciation as an absolute expense.
The depreciation schedule of both the Fifth Wheel and the Pick Up are very close, so I have used the same depreciation schedule for all examples.
www.rversonline.org /ArtNewUsed.html   (1352 words)

 Depreciation Methods
The depreciation method that you use for any particular asset is fixed at the time you first place that asset into service.
Once you know the classification and the tax basis of the asset you need to depreciate, you can use a special table provided by the IRS to determine the percentage of the item's tax basis that can be deducted each year.
Older methods of depreciation are used for pre-1987 property.
exectaxguide.cch.com /text/c60s15d595.asp   (611 words)

Plus, there is one provision of the tax law that allows you to deduct a huge portion and possibly the entire cost of some property you would normally depreciate in one year.
You are allowed by law to separate all of these pieces of property from the value of the building and depreciate them individually on IRS Form 4562.
The building value would be $170,000, creating an annual depreciation deduction of $6181.00, or an extra $728.00 per year in tax savings, just on the building.
www.landlord.com /depreciation_frame.htm   (1098 words)

 Appreciating Depreciation
Here we look at how to achieve this awareness when analyzing depreciation, which can represent a big portion of the expenses found on a company's income statement, and which can impact the value of the investment opportunity in the short term.
Depreciation is the process by which a company allocates an asset's cost over the duration of its useful life.
So, the numbers show that if Tricky uses the straight-line method, depreciation costs on the income statement will be significantly lower in the first years of the asset's life ($100,000 rather than the $200,000 rendered by the accelerated depreciation schedule).
www.investopedia.com /articles/fundamental/04/090804.asp   (1070 words)

Whatever the cause, there are two methods for determining the proper depreciation of an asset.
To calculate how much the asset depreciates annually, you need to know three numbers: 1) the purchase price of the asset; 2) the salvage value, or estimated value of the asset at the end of its useful life; and 3) the estimated useful life, or the number of years you imagine it to be useful.
The accumulated depreciation on your truck is $3,000.
www.oneminutemillionaire.com /affiliate/glossary/depreciation.asp   (490 words)

 Realty Times - Real Estate News and Advice
The authors conclude that, if the straight-line method of depreciating an entire structure is retained, the recovery period necessary to make tax depreciation correspond to economic depreciation is 20 years or less, significantly shorter than the present 27.5- and 39-year periods.
Under current tax law, section 168 of the Internal Revenue Code, the depreciation deduction for structures does not provide appropriate tax benefits because investors are forced to recover their costs more slowly than the structures' actual loss of value.
Previous research understated the rate of economic depreciation, and thus overstated the appropriate recovery periods, because it neglected to account for the substantial expenditures building improvements after original construction.
realtytimes.com /rtcpages/20000804_depreciation.htm   (573 words)

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