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LSDefine

Simple English definitions for legal terms

depreciation reserve

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A quick definition of depreciation reserve:

A depreciation reserve is money that a business sets aside every year to replace expensive items that wear out over time. This helps the business prepare for the cost of replacing equipment that is essential to their operation but too expensive to replace all at once. For example, if a cruise company needs to replace a $100 million ship in 20 years and the ship can be sold for $10 million at the end of that time, the business would put $4.5 million into a reserve account each year to pay for the new ship.

A more thorough explanation:

A depreciation reserve is a fund set up by a business to replace expensive items that lose value over time. The business puts money into the reserve every year based on the amount the item depreciates and its salvage value. This allows the business to have the funds available to replace expensive equipment as it must be replaced.

Let's say a company buys a machine for $50,000 that will last for 10 years and can be sold for $5,000 at the end of its useful life. The company would allocate $4,500 each year into a reserve account to pay for the replacement of the machine ($50,000 - $5,000 = $45,000 / 10 = $4,500).

Another example is a cruise company that must replace its new ship, which cost $100,000,000, in twenty years and the ship can be salvaged for $10,000,000 at the end of that twenty-year period. The business would allocate $4,500,000 each year into a reserve account to pay for the new ship ($100,000,000 - $10,000,000 = $90,000,000 / 20 = $4,500,000).

These examples illustrate how a depreciation reserve works by allowing a business to slowly prepare for the cost of replacing expensive equipment over time, rather than having to pay for it all at once. This helps the business avoid financial strain and plan for the future.

depreciation | derelict

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i cant i would go crazy
JumpySubsequentDolphin
20:50
i need to know who decided to do that.
JumpySubsequentDolphin
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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
22:39
@splitty Oregon!
oh yay for what thats so random
JumpySubsequentDolphin
22:45
haha my brother and sister in law live there
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