imported>Doug Williamson |
imported>Doug Williamson |
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| 1. ''Financial reporting - accounting practices.''
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| Accounting depreciation spreads the cost of a long-term tangible asset over its total life.
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| The depreciation accounting charge reflects:
| | In financial markets 'short term' usually means remaining maturities of up to and including one year. |
| * the estimated periodic cost to a business
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| * of a physical capital asset
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| * spread over its estimated useful economic life.
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| | There are some minor exceptions. For example in bond markets 'short term' can refer to original maturities of less than two years. |
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| Accounting depreciation seeks to ensure that the total accounting cost of a capitalised asset is appropriately spread and matched to the economic benefits of using the asset.
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| Accounting depreciation is applying the accruals accounting principle to spread the total cost of tangible long term assets over their expected useful life.
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| | ''Financial reporting''. |
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| Methods of spreading the total accounting cost include Straight line, Reducing balance and Sum of the digits.
| | For financial reporting purposes, short term borrowings and other liabilities are ones payable within a year, or the next financial reporting period, if shorter. |
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| Financial reporting standards generally permit the use of any systematic basis of allocating the total cost over the useful life of the asset.
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| It's important to be clear about the distinction between the:
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| *Depreciation charge for the period, reflected in the income statement; and
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| *Cumulative depreciation provision at the end of the period, reflected in the balance sheet.
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| The depreciation charge is an in-period accounting expense, charged against profits for the period.
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| The cumulative provision for depreciation is a liability in the balance sheet. It's offset against the cost of the assets, to calculate their accounting net book value.
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| Some accounting jurisdictions use the term ''amortisation'' both for this aspect of accounting both for tangible and intangible assets.
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| 2. ''Foreign exchange''.
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| A decrease in the value of a currency.
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| 3. ''Other contexts.''
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| More generally, any decrease in the value of an asset resulting from the passing of time.
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| == See also == | | == See also == |
| * [[Accruals accounting]] | | * [[Balance sheet]] |
| * [[Accumulated depreciation]] | | * [[Bond]] |
| * [[Amortisation]] | | * [[Longer term]] |
| * [[Appreciation]] | | * [[Maturity]] |
| * [[Assets]] | | * [[Quoted rate]] |
| * [[Capital allowances]] | | * [[Short]] |
| * [[Capitalisation]] | | * [[Short dates]] |
| * [[Carry trade]] | | * [[Short-term investments]] |
| *[[Cash flow]] | | * [[Short-term notes payable]] |
| * [[CertICM]] | | * [[Short termism]] |
| * [[Cost]]
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| * [[EBITDA]]
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| * [[IAS 16]]
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| * [[Impairment]]
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| * [[Intangible assets]]
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| * [[International Fisher Effect]]
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| * [[Net book value]]
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| * [[Property, plant and equipment]]
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| * [[Provision]]
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| * [[Reducing balance]]
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| * [[Revaluation]]
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| * [[Straight line]]
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| * [[Sum of the digits]]
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| * [[Tangible asset]]
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| * [[Tax depreciation]]
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| * [[Writing down allowance]]
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| [[Category:Accounting,_tax_and_regulation]] | | [[Category:Planning_and_projects]] |
| [[Category:Corporate_finance]] | | [[Category:The_business_context]] |
