Talk:Depreciation

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Depreciation was a good article, but it has been removed from the list. There are suggestions below for improving the article to meet the good article criteria. Once these are addressed, the article can be renominated. Editors may also seek a reassessment of the decision if they believe there was a mistake.

Delisted version: August 14, 2006

Why depreciation is subtracted to find the value of NNP

Contents

[edit] Amortization and depreciation

What's the difference between amortization and depreciation? I can't recall seeing an income statement with those two expenses separated. This link say that "Depreciation and Amortization are very closely related concepts", what does the FASB and other say about this?--Jerryseinfeld 13:56, 13 Apr 2005 (UTC)

Depreciation and amoritization are related, but are not exactly the same thing. Keep in mind that an asset is something that gives an organization future economic benefits. Depreciation is a way of showing that some of those benefits are being used up over time. An easy example would be a cash register. It may cost us $2,000 to buy the register, but that is because we consider that $2,000 register to provide us benefits. As time passes, we will depreciate the cash register, so we have a depreciation expense showing we used up some of that economic benefit.
, it will be amoritized over the shortest of its economic or legal life. If I spend money having to defend my trademark in court, that extra expense would be capitalized and would be amoritized over the remaining life of the trademark.
Hope that makes some sense... --Zoop 17:27, 12 August 2005 (UTC)

Amortization is the depreciation of intangibles i.e. goodwill. --lincs_geezer 23:57, 2 November 2006 (UTC)

[edit] Depreciation Methods

What factors should you consider when choosing a method?

From a tax perspective, generally most businesses prefer to apply the 'diminishing value' method as it provides greater immediate tax deduction in the early years.
From a more accounting theoretical basis, generally as depreciation is an attempt to attribute the asset across its useful life, its seen to be best to pick the method which most closely reflects the change in useful life of an asset.
A 'Water tank' for example which lets say has a useful life of 40 years, can generally be argued to mostly be just as useful in each year you have it so a straight line depreciation is likely more representative, ie. Just take the Total cost and divide it by 40 years and expense that amount each year.
Alternativley it can be argued that a 'Laptop computer' is really worth alot more in the early years, and really diminishes in value each year, hence let assume a laptop had a useful life of say 4 years (and yes, this is about how long the laptop still works not how long it is before its seen to be slow), then rather than claim an equal portion each year the diminishing value method applies to expense a larger figure initially with a gradually decreasing value every year.
Hope that explains it for you. --Evolve2k 12:12, 10 February 2006 (UTC)

[edit] Merge from Depreciação

The translated article Depreciação is about the same subject. If there's anything on that article that can be used to improve this one, please merge it here. - Bobet 13:58, 4 January 2006 (UTC)

I don't think so.. it's machine-translated so it's almost unreadable. I nominated it for deletion. Rhobite 14:13, 4 January 2006 (UTC)

[edit] Other Methods

I will expand these, this is just a place to work -- ∞Dbroadwell 16:39, 29 April 2006 (UTC)

  • Units of production
  • Units of operating time


I'm not sure I like Depreciation on the basis of 'operating time' since that seems to allow a company to not charge any depreciation in a year if the asset has not been used. Are there really companies out there that use this method or is it just an academic theory? AnthonyUK 17:36, 2 November 2007 (UTC)

[edit] difference between devaluation and depreciation

hello in Argentine Currency Board entry in wikipedia it is said that "In 1989, former President Raúl Alfonsín resigned, and in July of that year Carlos Menem was elected President. His early attempts to stabilize inflation failed, resulting in further devaluation of the peso and a serious reduction in the central bank's reserves." there has occurred a problem when i corrected this statement replacing devaluation with depreciation i was called a vandal :( IMHO devaluation is when the exchange rate is changed (lowered) by central Bank when the exchange rate is set by this institution, while depreciation is a term used when exchange rate changes (lowers) in floating exchange rate if someone wants to clear this out pls post your answer here or here: http://en.wikipedia.org/wiki/User_talk:Pablo-flores

[edit] De listed GA

This article did not go through the current GA nomination process. Looking at the article as is, it fails on criteria 2 of the GA quality standards. No references are cited. Please make necessary corrections, reexamine the article against the GA quality standards, and submit the article through the nomination process. RelHistBuff 15:03, 14 August 2006 (UTC)

[edit] Wear and tear

I disagree with the statement "Depreciation in accounting is often mistakenly seen as a basis for recognizing "wear and tear"". This is in fact the idea: it is the basis for recognizing wear and tear, and is the representation of it in accounting terms. What is mistaken is the notion that it is identical to wear and tear, or that the carrying value (purchase minus accumulated depreciation) equals the actual value. Is something else meant by this statement?

[edit] More Methods

1. Annuity method
=[C(1+I)N-S][1-(1-I)]/[1-(1-I)N]
2. Endowment Policy Method
3. Revaluation Method
Normally used for livestocks.
you may include these in the article.Or if you people permit I may contribute. Achalmeena 16:21, 5 February 2007 (UTC)

[edit] merge with salvage value

Currently, another article exists to deal with salvage value. It is currently a stub. I personally do not believe that it should have it's own article, as it can easily be explained in a few sentences on this page. Please feel free to share your opinions on the matter. Lordthees 13:37, 4 June 2007 (UTC)

[edit] Types of Depreciation

There should be written something about Expansionary and Contractionary Depreciation.

[edit] Write-down

I was redirected here from "write-down" and was dissatisfied with the portions of this page describing it. Considering the state of the U.S. economy, I wanted better examples of the reasons for (massive loss of revenue) and effects from (burden on taxpayers) taking multi-billion dollar write-downs. Jeff kuta (talk) 14:31, 26 March 2008 (UTC)

Ditto. 'Write-down' has become a very widely used phrase in the global media in the last few months. It's now more widely used in the media than 'depreciation'. I came here looking for a precise definition and an explantion of how a writedown works. This page doesn't give it.

I support having a new page focusing on the meaning of 'write-down' and how they work. RedTomato (talk) 13:17, 18 April 2008 (UTC)

I think you are looking for impairment, which is not described in this article because it is something different... although having said that, the article on impairment is very poor. AnthonyUK (talk) 14:09, 4 May 2008 (UTC)

[edit] Private Home Serve as Office

Some times you can use part of your home for your business (or it can be your office). In such case costs that incured to modify the house to make suitable for the business purpose and other expenses like lease, mortgage payments and also depreciation for the portion of the house used for the business(that is floor space used for the business) should be deducted as expense from the business income to arvive at the taxable income. This concept is not included in most countries tax law. What is your comment on this point? Tegegne Tibebu Abreham