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  • Answer You - Determination Of Depreciation

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    portionment and not a process of valuation. The depreciation provided fro a specific period is that portion of the total cost price of an asset allocated by this process to the perio
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    Therefore, the going concern and financial period principles underlie the depreciation process. Fixed assets, in other words, merely represent deferred expenses and the depreciation process is simply a means of allocating the deferred expenses to the correct financial period. Thus, with depreciation the emphasis is on systematic and realistic apportionment of the expenses involved in using the fixed assets. Accordingly, the accounting balance sheet does not show the current market value of fixed assets, nor does the depreciation provided measure the decrease in value over a period.

    The concept of depreciation as used in accounting does not imply the physical ageing of an asset. Depreciation is simply a process of apportionment and not a process of valuation. The depreciation provided fro a specific period is that portion of the total cost price of an asset allocated by this process to the period

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    process is simply a means of allocating the deferred expenses to the correct financial period. Thus, with depreciation the emphasis is on systematic and realistic apportionment of the expenses involved in using the fixed assets. Accordingly, the accounting balance sheet does not show the current market value of fixed assets, nor does the depreciation provided measure the decrease in value over a period.

    The concept of depreciation as used in accounting does not imply the physical ageing of an asset. Depreciation is simply a process of apportionment and not a process of valuation. The depreciation provided fro a specific period is that portion of the total cost price of an asset allocated by this process to the perio

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    expenses involved in using the fixed assets. Accordingly, the accounting balance sheet does not show the current market value of fixed assets, nor does the depreciation provided measure the decrease in value over a period.

    The concept of depreciation as used in accounting does not imply the physical ageing of an asset. Depreciation is simply a process of apportionment and not a process of valuation. The depreciation provided fro a specific period is that portion of the total cost price of an asset allocated by this process to the perio

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    ure the decrease in value over a period.

    The concept of depreciation as used in accounting does not imply the physical ageing of an asset. Depreciation is simply a process of apportionment and not a process of valuation. The depreciation provided fro a specific period is that portion of the total cost price of an asset allocated by this process to the perio

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    portionment and not a process of valuation. The depreciation provided fro a specific period is that portion of the total cost price of an asset allocated by this process to the period concerned.

    It is not always easy to determine what portion of the depreciable amount of a fixed asset must be allocated to any specific period, since a variety of factors have to be taken into consideration. The following are significant factors:

    Cost price - cost is the purchase price plus any additional expenses necessary to prepare an asset for use. Lifespan of an asset - the lifespan of an asset cannot be determined in advance and must, for accounting purposes, be estimated. This requires judgement, which is usually based on experience with similar assets. The present condition of the asset and the company's policy regarding the replacement of assets will also be determining factors. The lifespan of an a

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