depreciation

/dapriyshiyeyshsn/ In accounting, spreading out the cost of a capital asset over its estimated useful life. Depreciation expense reduces the taxable income of an entity but does not reduce the cash. A decline in value of property caused by wear or obsolescence and is usually measured by a set formula which reflects these elements over a given period of useful life of property. State Highway Commission v. Tubbs, 147 Mont. 296, 411 P.2d 739, 744. Consistent, gradual process of estimating and allocating cost of capital investments over estimated useful life of asset in order to match cost against earnings. Coca-Cola Bottling Co. of Baltimore v. U.S., 203 Ct.Cl. 18, 487 F.2d 528, 534. The depreciation expense recorded on the entity's tax return may differ from that recorded on the entity's financial statements. An entity usually uses an accelerated method on its tax return and the straight-line method on its financial statements due to the larger write-offs in the early years.
As to intangible assets, see amortization.
As to natural resources, see depletion.
- useful life.
Depreciation Methods:
Accelerated depreciation. Various methods of depreciation that yield larger deductions in the earlier years of the life of an asset than the straight-line method. Examples include the double declining-balance and the sum of the years' digits methods of depreciation.
Accrued depreciation.
See accrued depreciation, and accumulated depreciation, below.
Accumulated depreciation. Total depreciation recorded on an asset to date. On the balance sheet, accumulated depreciation reflects the book value of an asset.
@ accelerated depreciation
Various methods of depreciation that yield larger deductions in the earlier years of the life of an asset than the straight-line method. Examples include the double declining-balance and the sum of the years' digits methods of depreciation.
+ accelerated depreciation
Various methods of depreciation that yield larger deductions in the earlier years of the life of an asset than the straight-line method. Examples include the double declining-balance and the sum of the years' digits methods of depreciation.
- depreciation
@ accumulated depreciation
Total depreciation recorded on an asset to date. On the balance sheet, accumulated depreciation reflects the book value of an asset.
@ declining balance method
Under the declining balance method, the annual depreciation allowance is computed by multiplying the undepreciated cost of the asset each year by a uniform rate up to double the straight-line rate or 150 percent, as the case may be
@ double declining method
Spreading the initial cost of a capital asset over time by deducting in each period double the percentage recognized by the straight-line method and applying that double percentage to the undepreciated balance existing at the start of each period. No salvage value is used in the calculation.
@ replacement cost method
The amortization or depreciation of an asset in which the value is fixed in terms of replacement cost.
@ sinking fund method
A process of recovering the value of an asset by setting up a sinking fund.
@ straight-line method
Under the straight-line method of depreciation, the cost or other basis (e.g., fair market value in the case of donated assets) of the asset, less its estimated salvage value, if any, is determined first; then this amount is written off in equal amounts over the period of the estimated useful life of the asset. Taking the initial cost of a capital asset, deducting the expected salvage value at the time it is expected to be discarded, and spreading the difference in equal installments per unit of time over an estimated life of the asset.
@ sum-of-the-year's digits method
Under this method, the annual depreciation allowance is computed by multiplying the depreciable cost basis (cost less salvage value) by a constantly decreasing fraction. The numerator of the fraction is represented by the remaining years of useful life of the asset at the beginning of each year, and the denominator is always represented by the sum of the years' digits of useful life at the time of acquisition.
@ unit method
A depreciation or amortization method used in which an asset is written off in direct relation to the productivity of the asset. The cost of the asset is divided by the estimated total number of units to be produced, "(This unit cost is then multiplied by the number of units sold during the year resulting in the depreciation of amortization expense for the year
@

Black's law dictionary. . 1990.

Synonyms:

Look at other dictionaries:

  • dépréciation — [ depresjasjɔ̃ ] n. f. • 1771; de déprécier ♦ Action de déprécier, de se déprécier; état de ce qui est déprécié. Dépréciation des marchandises, de l or, de l argent. ⇒ avilissement, baisse, décote, dévalorisation. L inflation entraîne la… …   Encyclopédie Universelle

  • Depreciation — Dépréciation En économie, une dépréciation est une perte de valeur d un bien, ou plus généralement d une monnaie. En comptabilité générale, une dépréciation est la constatation comptable d une moins value probable sur un élément d actif. Sommaire …   Wikipédia en Français

  • depreciation — de·pre·ci·a·tion /di ˌprē shē ā shən/ n 1: any decrease in the value of property (as machinery) for the purpose of taxation that cannot be offset by current repairs and is carried on company books as a yearly charge amortizing the original cost… …   Law dictionary

  • Depreciation — De*pre ci*a tion (d[ e]*pr[=e] sh[i^]*[=a] sh[u^]n), n. [Cf. F. d[ e]pr[ e]ciation.] 1. The act of lessening, or seeking to lessen, price, value, or reputation. [1913 Webster] 2. The falling of value; reduction of worth. Burke. [1913 Webster] 3.… …   The Collaborative International Dictionary of English

  • DEPRECIATION — Снижение стоимости обесценивание валюты, вызванное действием рыночных механизмов и не связанное с действиями государственных организаций Словарь бизнес терминов. Академик.ру. 2001 …   Словарь бизнес-терминов

  • depreciation — 1767, a lowering of value (originally of currency), noun of action from DEPRECIATE (Cf. depreciate). Meaning loss of value of a durable good by age or wear is from 1900 …   Etymology dictionary

  • depreciation — [n] devaluation accounting allowance, deflation, fall, loss of value, reduction, slump; concepts 137,236,240,247 …   New thesaurus

  • depreciation — [dē prē΄shē ā′shən, diprē΄shē ā′shən] n. [see DEPRECIATE ] ☆ 1. a) a decrease in value of property through wear, deterioration, or obsolescence b) the allowance made for this in bookkeeping, accounting, etc. ☆ 2. a decrease in the purchasing… …   English World dictionary

  • Depreciation — Not to be confused with Deprecation. Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used… …   Wikipedia

  • depreciation — /dapriyshiyeyshsn/ In accounting, spreading out the cost of a capital asset over its estimated useful life. Depreciation expense reduces the taxable income of an entity but does not reduce the cash. A decline in value of property caused by wear… …   Black's law dictionary


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