Red tape and Reducing balance: Difference between pages

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''Regulation and compliance''.
1.
 
Red tape is a colloquial and derogatory expression for excessive regulation.
A basis of allocating costs or allowances across successive time periods by applying a consistent periodic percentage charge to - for example - the reducing net book value of a fixed asset.
 
For example, a fixed asset has a cost of $12m, to be depreciated on a reducing balance basis at a rate of 40% per year.
 
The depreciation charge for Year 1 would be $12m x 40% = $4.8m.
 
The net book value at the end of Year 1 (and the start of Year 2) = 12 - 4.8 = $9.2m.
 
The depreciation charge for Year 2 = $9.2m x 40% = $3.68m.
 
The net book value at the end of Year 2 (and the start of Year 3) = 9.2 - 3.68 = $5.52m.
 
And so on.
 
Using a reducing balance basis of depreciation, the net book value never falls to zero (unless the asset is disposed of).
 
 
2.
 
''UK Tax.''
 
UK Writing Down tax Allowances are normally available to be claimed on a reducing balance basis.




== See also ==
== See also ==
* [[Deregulation]]
* [[Depreciation]]
* [[Red herring]]
* [[Straight line]]
* [[Regulation]]
* [[Sum of the digits]]
 
* [[Writing down allowance]]
[[Category:Accounting,_tax_and_regulation]]

Revision as of 15:11, 20 August 2013

1.

A basis of allocating costs or allowances across successive time periods by applying a consistent periodic percentage charge to - for example - the reducing net book value of a fixed asset.

For example, a fixed asset has a cost of $12m, to be depreciated on a reducing balance basis at a rate of 40% per year.

The depreciation charge for Year 1 would be $12m x 40% = $4.8m.

The net book value at the end of Year 1 (and the start of Year 2) = 12 - 4.8 = $9.2m.

The depreciation charge for Year 2 = $9.2m x 40% = $3.68m.

The net book value at the end of Year 2 (and the start of Year 3) = 9.2 - 3.68 = $5.52m.

And so on.

Using a reducing balance basis of depreciation, the net book value never falls to zero (unless the asset is disposed of).


2.

UK Tax.

UK Writing Down tax Allowances are normally available to be claimed on a reducing balance basis.


See also