imported>Doug Williamson |
imported>Doug Williamson |
| Line 1: |
Line 1: |
| 1. ''Financial reporting - accounting practices.'' | | 1. |
|
| |
|
| Accounting depreciation spreads the cost of a long-term tangible asset over its total life.
| | Basis points, 0.01% per point for interest rates. |
|
| |
|
| The depreciation accounting charge reflects:
| |
| * the estimated periodic cost to a business
| |
| * of a physical capital asset
| |
| * spread over its estimated useful economic life.
| |
|
| |
|
| | 2. |
|
| |
|
| 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.
| | Forward foreign exchange rate points. |
|
| |
|
| Accounting depreciation is applying the accruals accounting principle to spread the total cost of tangible long term assets over their expected useful life.
| |
|
| |
|
| | 3. |
|
| |
|
| Methods of spreading the total accounting cost include Straight line, Reducing balance and Sum of the digits.
| | Foreign exchange swap rate points. |
|
| |
|
| Financial reporting standards generally permit the use of any systematic basis of allocating the total cost over the useful life of the asset.
| |
|
| |
|
| | 4. |
|
| |
|
| It's important to be clear about the distinction between the:
| | ''US.'' |
| *Depreciation charge for the period, reflected in the income statement; and
| |
| *Cumulative depreciation provision at the end of the period, reflected in the balance sheet.
| |
|
| |
|
| | | 1% of a loan principal amount. |
| The depreciation charge is an in-period accounting expense, charged against profits for the period.
| |
| | |
| 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.
| |
| | |
| | |
| Some accounting jurisdictions use the term ''amortisation'' both for this aspect of accounting both for tangible and intangible assets.
| |
| | |
| | |
| 2. ''Foreign exchange''.
| |
| | |
| A decrease in the value of a currency.
| |
| | |
| | |
| 3. ''Other contexts.''
| |
| | |
| More generally, any decrease in the value of an asset resulting from the passing of time.
| |
|
| |
|
|
| |
|
| == See also == | | == See also == |
| * [[Accruals accounting]] | | * [[Basis point]] |
| * [[Accumulated depreciation]] | | * [[Forward points]] |
| * [[Amortisation]] | | * [[Pip]] |
| * [[Appreciation]] | | * [[Point]] |
| * [[Assets]] | | * [[Swap points]] |
| * [[Capital allowances]]
| |
| * [[Capitalisation]]
| |
| * [[Carry trade]]
| |
| *[[Cash flow]]
| |
| * [[CertICM]]
| |
| * [[Cost]]
| |
| * [[EBITDA]]
| |
| * [[Impairment]]
| |
| * [[Intangible assets]]
| |
| * [[International Fisher Effect]]
| |
| * [[Net book value]]
| |
| * [[Property, plant and equipment]]
| |
| * [[Provision]]
| |
| * [[Reducing balance]]
| |
| * [[Straight line]]
| |
| * [[Sum of the digits]]
| |
| * [[Tangible asset]]
| |
| * [[Tax depreciation]]
| |
| * [[Writing down allowance]]
| |
| | |
| [[Category:Accounting,_tax_and_regulation]]
| |
| [[Category:Corporate_finance]]
| |
