What is the collected depreciation?

The depreciation obtained is the amount of the total value that the asset has lost since it was newly purchased. Also known as accumulated depreciation, it is included in the balance sheet of the company or business as an obligation to reflect the smaller value of the asset. There are many different ways to calculate the depreciation of assets, with direct depreciation and decreasing equilibrium depreciation. Regardless of the depreciation method, the depreciation accumulated represent the amount of value that has been lost during the life of the asset. This process, known as depreciation, allows the business to pay taxes on the basis of what the asset has for how time is, rather than always paying, as if it were new. On the stern, the amount of the lost value will start to be built for several years, the total depreciation amount is known as the accumulated depreciation.

In the balance sheet, the collected depreciation is usually included as responsibility directly below the assetit is. This type of account in the balance sheet is known as the Contra account because it works against asset. For example, the asset could have $ 5,000 (USD) at the time of its purchase, but was depreciated by $ 2,000 for the period. USD $ 2,000 would be in the balance sheet as a counter account for $ 5,000.

There is a difference between the depreciation accumulated and the cost of evaluation that needs to be noted when the company includes its balance sheet. The depreciation costs are the amount of value lost in one year. If a computer purchased by a company depreciates $ 1,000 USD every year, at the end of the second year, the depreciated depreciation would be $ 2,000. On the other hand, depreciation expenditure in the balance sheet would still be $ 1,000 in the second year.

Many different ways are used to calculate the depreciation of the asset. The direct line method is the easiest, simply accepting the value of the asset and the division of years when the asset is expected to be used. For example, a $ 5,000 car that is expected to take five years wouldEven a year depreciated $ 1,000, ie $ 5,000 divided by five. In the method of depreciation of balance, the asset is associated with a percentage of deterioration, which reduces the value of the asset by this rate each year, leading to decreasing depreciation costs each year. The depreciation involved is the total amount of depreciation that has occurred by any method that is elected.