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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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Dkk
19:42
SEO is big money
2016 pushed the conservative party into populism irreversibly
Dkk
19:43
Maybe, but if this is populism, then every election is populist.
19:43
@Dkk: yeah register 1 website and every swinging tom dick and harry calls/emails/texts to 'help with seo'. like bruh, if YOU found it, what i am doing is working
Dkk
19:43
Indeed!
19:48
wasp, i think people are hopeful for a gov who at least attempts to care about the common man
MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
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