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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.


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


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


(industrial engineering)
Loss of value due to physical deterioration.


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 ?
Straight-line depreciation would imply that properties actually depreciate over their physical lives in a manner that is most consistent with simplified age-life methods.
This article examines the computation methods currently allowed for each type of depreciation for the 1990 tax year and beyond.
Even foreign investors, whom everyone expected to swoop in to pick up stocks in the event of rupee depreciation, have continued to keep their sangfroid.
When properly applied, ARM suggests that component depreciation may be preferable because it likely "will result in a more accurate determination of depreciation and will facilitate accounting when the component is replaced.
Property eligible for bonus depreciation also must be original-use property, placed in service in the applicable time frame, and qualified property under Sec.
Correcting assets and bringing them to the level of inventory value is done, depending on the type of depreciation, either by registering added depreciation, if there is an irreversible impairment or by establishing or supplementing the adjustments for depreciation, in which case there is a reversible depreciation of them.
Thus, in determining the taxable base, the method of fical depreciation chosen has a majore importance.
Depreciation for the first placed-in-service year remains the lesser of 100% bonus depreciation or the first-year limitation amount.
A taxpayer may elect out of the bonus depreciation allowance for any class of property for the tax year.
Thus, the purpose of the article is to expose the inequities of the Basis Reduction Tax Trap and to advocate the amendment of the Code by incorporating tax benefit components to eliminate it without compromising the integrity of the depreciation deduction.
Under this concept, depreciation of all assets coming within specified categories would be calculated by applying the depreciation rate on the written down value which would be computed as follows: