Depreciation | Business Economics - A Library of Information

Bookkeeping – Estimating Depreciation (Lesson 83)

01/16/2018 David J Hoare

Depreciation is a form of an allowance for the wear and tear (exhaustion) of property used in a trade or a commercial enterprise. The idea is to match as well as possible the actual use […]

Bookkeeping – Estimates (Lesson 82)

01/11/2018 David J Hoare

There are many transactions in accounting requiring the accountant to use estimates for the respective debits and credits. The following five lessons cover how estimating is performed with depreciation, payroll benefits, bad debts, warranties and extraordinary […]

Fixed Asset Turnover Rate

09/24/2017 David J Hoare

The fixed asset turnover rate is another activity ratio whereby an income statement financial characteristic is compared to a balance sheet asset section. In this case, comparing adjusted sales against historical cost of fixed […]

Bookkeeping – Recurring Entries (Lesson 65)

07/15/2017 David J Hoare

Every day bills arrive from vendors that are mere repetition like the electric or phone bill. They basically recur every so often (mostly monthly). The bookkeeper must create a new entry as a part of […]

Cash Flow From Operations – Basic Formula

07/02/2017 David J Hoare

The cash flows statement in accounting is broken out into three major sections as follows: 1) Cash Flow from Operations 2) Cash Flow from Investing 3) Cash Flow from Financing Of the three, cash flow […]

Bookkeeping – Amortization (Lesson 53)

04/23/2017 David J Hoare

Amortization is similar to depreciation whereby an asset’s cost is allocated to the expense over time. There are several differences with amortization. Amortization is used with intangible assets and the method is almost […]

Bookkeeping – Book and Tax Depreciation (Lesson 52)

03/19/2017 David J Hoare

One of the differences between book income and taxable income is depreciation. In general Section 168 of the Internal Revenue Code allows businesses to accelerate their depreciation for tax purposes. This increases the expenses of […]

Bookkeeping – Depreciation Schedules (Lesson 51)

03/19/2017 David J Hoare

When a small business purchases fixed assets two financially based opposing forces come into play. The first is the financial reporting desire to present information in a fair manner so management can make good financial […]

Bookkeeping – Introduction to Depreciation (Lesson 50)

03/12/2017 David J Hoare

Depreciation is the process of allocating the initial capital outlay for fixed asset purchases over time to the income statement. The basic principle is that any fixed asset has a predetermined lifetime based on time, […]

EBITDA

02/03/2017 David J Hoare

EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. The value is generally known as operational profit before capital expenditures and tax obligations. EBITDA is frequently used for estimating value […]