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 ?
We propose to assign priority access rights for the 3.5GHz band using "depreciating licenses" sold on a depreciating license exchange (DLE).
As you are faced with a rising base of these first-time landlords, be sure to inform them about the pros and cons of depreciating their converted property.
The final regulations carry forward the foundational approach to depreciating exchanged property promulgated in proposed and temporary regulations.
The bank points the finger at the Renault Laguna, Nissan Primera, Ford Mondeo, Vauxhall Omega, Toyota Avensis, Vauxhall Vectra, Peugeot 406, Nissan Micra, Renault Megane and Fiat Punto as the worst depreciating cars in Britain.
In January 2000, the IRS issued Notice 2000-4, to provide guidance for depreciating MACRS property acquired in a Sec.
Consequently, the furniture maker had been depreciating the displayed furniture, using a five-year life for the products.
In finance parlance, they are called depreciating assets.
After depreciating them for several years, the taxpayer, relying on an IRS Industry Specialization Program position paper, determined that the gas stations should have been depreciated using 15-year lives.
You may remember the method of depreciating your properties referred to as component depreciation.
Often, the tenant uses such payments for improvements to the property, depreciating them over 39 years (the current recovery period for nonresidential real property).
However, before the final regulations are issued, the IRS will allow "any reasonable method" of depreciating the property to be used in the change year and subsequent tax years, as long as the method is consistently applied.
They mistakenly capitalize these costs into the project basis and depreciate them over 39 years instead of allocating them to their true asset class lives and depreciating them over 5, 7, or 15 years.