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Generally the cost is allocated, as depreciation expense, among the periods in which the asset is expected to be used. These may be specified by law or accounting standards, which may vary by country. In determining the profits net income from an activity, the receipts from the activity must be reduced by appropriate costs.
The business then records depreciation expense in its financial reporting as the current period's allocation of such costs. There are several standard methods of computing depreciation expense, including fixed il latino dating, straight line, and declining balance methods.
The former affects chagigah online dating balance sheet of a business or entity, and the latter affects the net income that they report. If an asset is expected to produce a benefit in future periods, some of these costs must be deferred rather than treated as a current expense. Methods of computing depreciation, and the periods over which assets are depreciated, may vary between asset types within the same business and may vary for tax purposes.
This is usually done in a rational and systematic manner. Depreciation is technically iplayer the apprentice dating site method of allocation, not valuation, even though it determines the value placed on the asset in the balance sheet.
For example, a depreciation expense of per year for five years may be recognized for an asset costing The asset is referred to as a depreciable asset.
Any business or income producing activity using tangible assets may incur costs related to those assets. Depreciation is any method of allocating such net cost to those periods in which the organization is expected to benefit from use of the asset.
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