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Depreciation is technically a method of allocation, not valuation, even though it determines the value placed on the asset in the balance sheet.
The former affects the balance sheet of a business or entity, and the latter affects the net income that they report. The asset is referred to as a depreciable asset. 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.
Generally the cost is allocated, as depreciation expense, among the periods in which the asset is expected to be used.
For example, a depreciation expense of per year for five years may be recognized for mexican dating agencies asset costing There are several standard methods of computing depreciation expense, including fixed percentage, straight line, and declining balance methods.
This expense is recognized by businesses for financial reporting and tax purposes. These may be specified by law or accounting standards, which may vary by country.
One such cost is the cost of assets used but not immediately consumed in the activity. Any business or income producing activity using tangible assets may incur costs related to those assets.
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