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 ?
Homeowners converting their former residences to rental property often miscalculate their allowable depreciation expense or tail to realize the tax benefit of the expense Likewise, they are often unprepared for the tax consequences upon the sale of property that has been depreciated.
Handing over of other assets to IOA, NDMC and other local bodies at depreciated value.
For example, a Fiat Seicento which cost pounds 6,288 depreciated in value rapidly during the first year.
Rafael Buenaventura, governor of the Central Bank of the Philippines, meanwhile, said the peso will not be depreciated despite the economic slowdown.
Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset.
This beautiful city of Glendale must not be depreciated by the Pavlovian liberals from la-la land who now control the Glendale City Council.
Particularly troublesome to me as a sometime small-business proprietor is the assertion that the 20 percent profit calculation based on writing off research and development as "current expenses" would shrink to 9 percent if those expenses were depreciated.
Tesco said fully depreciated assets would not be included in the depreciation charge but would still be included in the gross asset value, while fittings bought recently for overseas lasted longer and depreciated at a different pace.
The alternative is to insure on an actual cash value basis, which basically is a depreciated replacement cost value.
The models offer full-replacement value versus depreciated value insurance, and increases the maximum liability claim from $40,000 to more than $70,000.
One conceptual problem with analyzing the validity of the removal of this step is that since the resultant amount of functional obsolescence is deducted from the depreciated reproduction cost of the whole property, all the mathematical signs of the three or four components are effectively reversed when the individual components are adjusted from the depreciated reproduction cost of the whole property.