Tuesday, January 27, 2009

Definition of Depreciation Summary

  • Depreciation is an allocation of capital expenditures over the estimated revenue producing period of a long term asset. This is required due to the matching principle.
  • Depreciation is a determined by acquisition cost, useful life, depreciation rate, and estimated salvage value.
  • Depreciation does not involve the cash account Only the purchase and disposal of assets involve cash account
Additional Links to Accounting Problems and Examples:
Asset Historical Cost Examples
Straight Link Depreciation Example
Depreciation of an Asset and Book Value

No comments:

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.