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There are several standard methods of computing depreciation expense, including fixed percentage, straight line, and declining balance methods.
Any business or income producing activity using tangible assets may incur costs related to those assets. Generally the cost is allocated, as depreciation expense, among the periods in which the asset is expected to be used.
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. These may be specified by law or accounting standards, which may vary by country.
Depreciation is super once capitulo 74 latino dating method of allocating such net cost to those periods in which the organization is expected to benefit from use of the asset.
In accountancy, depreciation refers to two aspects of the same concept: Depreciation expense generally begins when the asset is placed in service.
Depreciation is technically a method of allocation, not valuation, even though it determines the value placed on the asset in the balance sheet. In determining the profits net income from an activity, the receipts from the activity must be reduced by appropriate costs. The asset is referred to as a depreciable asset.
The former affects the balance sheet of a business or entity, and the latter affects the net income that they report. One such cost is the cost of assets used but not immediately consumed in the activity. Generally this involves four criteria: 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.
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