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LSDefine

Simple English definitions for legal terms

depreciation

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A quick definition of depreciation:

Depreciation: When something gets old or used up, it loses value. This happens to things like machines, cars, and even buildings. People and businesses need to keep track of how much value is lost each year, so they can report it on their taxes and financial statements. This is called depreciation. There are different ways to calculate it, but the most common is to spread the loss evenly over the item's useful life. This helps make sure that people and businesses are paying the right amount of taxes and showing their financial health accurately.

A more thorough explanation:

Depreciation is when something loses value over time due to wear and tear. This happens to many things, like appliances and construction machinery, and they eventually need to be replaced. For businesses and individuals, large items that lose value can affect their balance sheet, income statements, and taxes. To account for this loss of value, the cost of an asset is spread out over its useful life through a process called depreciation.

When it comes to taxes, businesses and individuals must decide how to depreciate assets over time because they can take a tax deduction for the asset. The IRS has strict rules for how different types of assets must be depreciated, with some being depreciated in one year and others over many years. This is because depreciation reduces taxable income and is subject to abuse.

In accounting, businesses want their profits to appear high or low for various reasons. Large purchases of equipment can greatly affect profitability in a given year. To prevent abuse, national and international standards govern how items must be depreciated over time, such as generally accepted accounting principles (GAAP).

There are many ways to calculate depreciation, but the most common is the straight-line method. This evenly depreciates the asset over its useful life. For example, if a company purchased a generator for $10,000 with a useful life of ten years, the company would depreciate the generator $1,000 each year for ten years. Another popular method is the declining balance method, which depreciates the asset based on a percentage equal to the useful life of the asset.

For instance, a car loses much more value in its first year than its last useful year. So, if a company purchased a car for $20,000 with a useful life of five years, they could use the declining balance method to take a 40% deduction in the first year, a 24% deduction in the second year, and so on until the car is fully depreciated.

depreciate | depreciation reserve

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THATS SO FUNNY
i cant i would go crazy
JumpySubsequentDolphin
20:50
i need to know who decided to do that.
JumpySubsequentDolphin
20:50
omg im on a plane weeeee
the devil
youre on a plane??? LSD made the mile high club??
20:50
yo splitterus are you in school already
20:50
it says ur c/o 2027
JumpySubsequentDolphin
20:51
@SplitterusClitterus: HAHAH yes
ur user is hilarioussss and no i just graduated this may and am now applying ---also im out of messages so ill take a lil
20:52
roger dat. see u in heck
im back, r u applying this cycle too
JumpySubsequentDolphin
21:32
this child fell asleep on me
JumpySubsequentDolphin
21:32
im so uncomfortable
just push him off the entire seat
JumpySubsequentDolphin
21:34
LMAOOOO
JumpySubsequentDolphin
21:35
no he’s literally like 8 and he fully just put his head on my bicep and slept
JumpySubsequentDolphin
21:35
he has since moved
22:12
@SplitterusClitterus: me yesterday
gulc baby pls text me back... i miss you ...... :(
22:23
i just went into a discord vc and yelled "YALL I JUST GOT INTO J.M. SCHOOL OF LAW"
22:24
people were getting excited :sob:
22:25
then someone was like "what does jm stand for" and i was like .. well
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@JumpySubsequentDolphin: wait this is so cute, also where r u going
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JumpySubsequentDolphin
22:39
@splitty Oregon!
oh yay for what thats so random
JumpySubsequentDolphin
22:45
haha my brother and sister in law live there
so cutie oregon is beatiful
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