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LSDefine

Simple English definitions for legal terms

depreciation method

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A quick definition of depreciation method:

A depreciation method is a way to estimate how much an asset will wear out or become obsolete over time. This is important for calculating how much of a tax deduction can be taken each year. There are different methods, such as the straight-line method, which spreads out the cost of the asset evenly over its useful life, and the double-declining method, which takes more deductions in the earlier years. Other methods include the annuity method, the units-of-output method, and the replacement-cost method. Each method has its own formula for calculating depreciation.

A more thorough explanation:

A depreciation method is a formula used to estimate the decrease in value of an asset over its useful life due to wear, tear, or obsolescence. This method is useful in calculating the allowable annual tax deduction for depreciation.

  • Straight-line depreciation method: This method writes off the cost of the asset by deducting the expected salvage value from the initial cost of the capital asset, and dividing the difference by the asset's estimated useful life. For example, if a company buys a machine for $10,000 with an expected useful life of 5 years and a salvage value of $2,000, the annual depreciation expense would be $1,600 ($10,000 - $2,000 / 5).
  • Double-declining depreciation method: This method spreads over time the initial cost of a capital asset by deducting in each period twice the percentage recognized by the straight-line method and applying that double percentage to the undepreciated balance existing at the start of each period. For example, if a company buys a machine for $10,000 with an expected useful life of 5 years and a salvage value of $2,000, the annual depreciation expense would be $3,200 in the first year (2 x 20% x $10,000) and $1,280 in the second year (2 x 20% x $6,800).
  • Units-of-output depreciation method: This method allocates the cost of a depreciable asset, minus salvage value, to the accounting periods benefited based on output (as miles, hours, number of times used, and the like). For example, if a company buys a machine for $10,000 with an expected output of 100,000 units and a salvage value of $2,000, and produces 20,000 units in the first year, the depreciation expense would be $1,600 ($8,000 / 100,000 x 20,000).

These examples illustrate how different depreciation methods can be used to calculate the annual depreciation expense for an asset based on its expected useful life, salvage value, and productivity.

depreciable life | depredation

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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.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
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