depreciation

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depreciation,

in accountingaccounting,
classification, analysis, and interpretation of the financial, or bookkeeping, records of an enterprise. The professional who supplies such services is known as an accountant. Auditing is an important branch of accounting.
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, reduction in the value of fixed or capital assets, as by use, damage, weathering, or obsolescence. It can be estimated according to a number of methods. 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. Other methods distribute depreciation over the life of the asset by gradually increasing, or gradually diminishing, installments. The resale value of a machine generally declines most quickly during its early years; thus its depreciation is measured in decreasing installments. 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. The technical name for the depreciation of such nonmaterial rights is amortization. The problem of calculating depreciation has special importance because of the need for accuracy in income tax returns. Failure to make allowance for depreciation results in overestimating income. 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.

Bibliography

See J. D. Coughlan, Depreciation (1969); R. P. Brief, ed., Depreciation and Capital Maintenance (1984).

Depreciation

The reduction in the value or worth of an asset, such as a building, through physical deterioration over time, and general obsolescence.

depreciation

[di‚prē·shē′ā·shən]
(industrial engineering)
Loss of value due to physical deterioration.

depreciation

Economics a decrease in the exchange value of currency against gold or other currencies brought about by excess supply of that currency under conditions of fluctuating exchange rates
References in periodicals archive ?
This issue has not reached the other circuits, so that taxpayers residing outside the Second and Third Circuits should be prepared to litigate if they depreciate assets with an indeterminable life.
Sam anticipates the new corporation would have a basis in the assets equal to the $200,000 FMV and would depreciate that higher basis.
The IRS has always argued in such cases that musical instruments are priceless works of art that do not depreciate over time.
946, How to Depreciate Property, stated that only the basis allocable to the boot paid qualified for new depreciation methods and conventions, including bonus depreciation.
168(i)-4(d)(3)(i), taxpayers take the adjusted basis at the beginning of the change year and depreciate the property over the shorter period.
179 expense election to $100,000 under the JGTRRA, many nonluxury vehicles can be fully expensed in year one, a substantial benefit when compared to the several years it would take to depreciate a $30,000 luxury automobile.
By doing so, the beneficiary can now depreciate the portion of the $10 million attributable to the building, thereby reducing their taxable income from the property.
the taxpayer was allowed to depreciate baseball player contracts.
A visual inspection will also uncover additional items that may be reclassified to depreciate over a shorter period.
First, the values of well-maintained properties usually appreciate rather than depreciate.
For 1996 and 1997, B continued to classify and depreciate the gas station properties in the same manner as on the amended 1993-1995 returns.
The modified accelerated cost recovery system (MACRS) is generally, but not always, used to depreciate tangible depreciable property placed in service after 1986.