How to calculate depreciation and the methods to use for calculating it, are discussed here. Find out how to calculate depreciation by reading the blog post here!
What is depreciation anyway? Maybe many of you do not know the term depreciation in the accounting world. Even though its role is quite vital.
Definition of depreciation is as follows
What exactly is meant by depreciation? Depreciation is a decrease in the value of fixed assets. This depreciation is permanent. In other words, when the asset is deducted by depreciation expense, it can no longer be returned to its original value.
This depreciation of assets can be due to the use of assets or the expiration of time. But, you need to know too, that this depreciation cannot be used for intangible assets, so it is only used for tangible fixed assets.
So depreciation can be interpreted as something that can change the original cost of fixed assets.
For example, factory buildings, work equipment and production machinery are expenses over the expected useful life of these fixed assets.
Then in addition to understanding the meaning of depreciation, here you will also be informed on how to calculate the depreciation.
This depreciation expense will affect net income, because it will be considered as an expense in the financial statements.