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 ?
Less: Accumulated depreciation 31,276,621 24,457,476
b) entity applies the revaluation model (assets are valued at fair value less any subsequent accumulated depreciation and subsequent accumulated impairment losses).
A bull that they had purchased previously for $1,000 had an accumulated depreciation of $300.
The depreciation fraction for the year is 10 percent; the accumulated depreciation fraction at the end of 2007 is 75 percent.
The general practice was to accrue the negative salvage value over the life of the facility as part of depreciation expense and to accrue the corresponding liability as a reduction in assets through accumulated depreciation. In essence, this meant that the amount of nuclear decommissioning costs recognized annually was reflected as depreciation expense with a corresponding credit to accumulated depreciation rather than to a liability account.
An example is the figure for fixed assets after accumulated depreciation.
Table 1: Balance Sheets, FASB Format with Proposed Terminology, for "Tel-Aviv Hospital" As of December 31, 2001 and 2002 2001 2002 ASSETS Cash and cash equivalents $220,000 $259,000 Receivables 37,000 277,000 Allowance for bad debts -7,000 -11,000 Inventory 14,000 37,000 Total current assets 264,000 562,000 Plant fund 125,000 99,800 Endowment fund 266,000 266,000 Land 400,000 400,000 Buildings 1,750,000 1,750,000 Accumulated depreciation: bldgs.
Note 2--Investments: The Association's investments consisted of the following at June 30, 2002: Cost Fair Value Money market investments $38,912 38,912 Mutual funds 29,415 31,142 Bonds 178,958 194,774 Equities 290,687 727,819 $537,972 542,647 Note 3--Property and Equipment: Property and equipment at June 30, 2002, is summarized as follows: Furniture and fixtures $416,895 Less accumulated depreciation (268.079) $148,816 Note 4--Retirement Plan: The Association offers a voluntary participation 401(k) retirement plan to its employees.
Some groups, such as market leader Organizacoes Globo, which owns TV Globo and Globosat, are in a difficult debt situation, aggravated by a 57% accumulated depreciation of local currency in the January 2001-September 2002 period.
We will not address other loss or valuation accruals nor will we address the proposed rule adding Item 302(d), relating to property, plant, and equipment and related accumulated depreciation, depletion, and amortization.
The adjusted basis is equal to the price paid by the investor ([V.sub.O]) less the accumulated depreciation. The accumulated depreciation is determined by n/N times the depreciable basis (b[V.sub.O]).

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