Depreciation

Depreciation is a term we hear often, but not really understand. Is an essential component of accounting however. Depreciation is an expense that is recorded in the same time and in the same period as the other accounts. Long-term assets are not for sale provided in the ordinary course of business called assets. Fixed assets include buildings, machinery, office equipment, vehicles, computers and other devices. You can also terms such as shelves and cabinets. Depreciation of the allocation of the cost of an asset in the last years of his life in a society, rather than charge the full amount of the expenditure for the year of purchase of assets. So each year, the team uses either a portion of total costs. For example, cars and trucks in the rule over five years are written off. The idea is a fraction of the total cost to depreciation charge for each of the five years instead of just the first year.

Depreciation applies only to assets that do not buy rent lease, or. Depreciation is a real cost, but not necessarily covered out of pocket expenses a year. Payment is made when the asset is acquired, it is recorded over a longer period.

Depreciation differs from other expenditure. This follows from the sale to determine the benefits, but the depreciation in the period under review does not cover the payment in that period. Depreciation is the total cost of the assets of a company that is counting on the period by the cost of using assets over the period is attributed. The higher the total investment costs of a company, then more damping.