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Recording the cost of equipment as an expense over the time it is expected yo produce revenue is called?
depreciation
What does depreciation expense mean?
It is assumed that long lived tangible assets reduce in value over time. This reduction in value is hard to quantify economically, but is an acceptable reduction in income when calculating income tax. This reduction in value due to use or age of a long lived asset is called depreciation. The reduction or offset against income is called depreciation expense. Usually this is not an expense that requires the immediate expenditure of cash, but is called a non-cash expense deducted from income before calculating income tax. Generally the depreciation expense amounts are calculated from formulas promulgated by tax regulators to either model actual economic depreciation, or to motivate certain economic behaviors by allowing favorable tax treatment for the favored activities.
How would you define depreciation?
For anything other than land, which is not allocated, the reclassification of tangible assets is called depreciation (for anything other than natural resources) or depletion (for natural resources) expense.
Depreciation is called as notional cost why and explain?
Depreciation is called a notional cost because it cannot be measured in real terms.
What is it called when an asset loses value?
Depreciation
The process of allocating the cost of plant assets to expense over their useful lives is called-?
Depreciation
Recording the cost of equipment as an expense over the time it is expected yo produce revenue is called?
depreciation
What does depreciation expense mean?
It is assumed that long lived tangible assets reduce in value over time. This reduction in value is hard to quantify economically, but is an acceptable reduction in income when calculating income tax. This reduction in value due to use or age of a long lived asset is called depreciation. The reduction or offset against income is called depreciation expense. Usually this is not an expense that requires the immediate expenditure of cash, but is called a non-cash expense deducted from income before calculating income tax. Generally the depreciation expense amounts are calculated from formulas promulgated by tax regulators to either model actual economic depreciation, or to motivate certain economic behaviors by allowing favorable tax treatment for the favored activities.
How would you define depreciation?
For anything other than land, which is not allocated, the reclassification of tangible assets is called depreciation (for anything other than natural resources) or depletion (for natural resources) expense.
Why depreciation expense is not included in the cash flow statement?
Depreciation Expense, though called an expense, is not an expense where the company actually pays money out. The statement of cash flows deals with the company's "cash flow" in order for a manager to see where the company's cash is going to and coming from. Since depreciation expense doesn't involve actual cash flow, it would not affect the Cash account.
A method that charges the same amount of expense over each period of the asset's useful life is called?
straight line depreciation
What type of account is accumulated depreciation and how is it reported in the financial statements?
Accumulated depreciation is a contra-asset account and show in the asset section of the Balance Sheet. It is called contra-asset account because contrary to any asset account Acc. Dep. is a credit type of account. The offset of Accumulated depreciation is to Debit the expense account Depreciation.
Is the deprecation expense on the income statement a non cash expense?
Correct. When a long-term tangible asset is purchased (e.g., property, plants and equipment), the Matching Principle under GAAP requires expenses to be systematically matched with the periods in which the corresponding revenues are generated. All depreciation expense does is systematically expense the asset over the period of its useful life. The useful life of the asset has nothing to do with when cash was actually paid for the asset.
Depreciation is called as notional cost why and explain?
Depreciation is called a notional cost because it cannot be measured in real terms.
Is there a depreciation chart that National Flood Insurance Program uses for personal property depreciation?
It is called (JOINT MILITARY/INDUSTRY DEPRECIATION GUIDE)
What is it called when an asset loses value?
Depreciation
Is interest expense a selling or general and administrative expense?
Interest expense is neither selling or administrative, and it's too significant to be called a general expense. Interest expense is usually called a finance expense and is usually listed separately from SG&A, on the Income Statement
