Definition: The declining balance or reducing balance depreciation method considers the value of assets that are largely used or highly contribute to operation at the beginning and then subsequently decline. That means depreciation expenses that should be charged to certain types of assets are high at first and then low subsequently. This is the main […]
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Explanation: The diminishing balance depreciation method is one of the three depreciation methods mentioned in IAS 16. This kind of depreciation method is said to be highly charged in the first period, and then subsequently reduce. This is because the charging rate is applying to the Net Book Value of Assets and the Net Book
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Definition: The straight-line depreciation method is one of the most popular depreciation methods used to charge depreciation expenses from fixed assets equally period assets’ useful life. This method is quite easy and could be applied to most fixed assets and intangible fixed assets. The straight-line depreciation method considers assets used and provides the benefit equally
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Definition: Capital expenditures are the type of expenses that the entity spends on acquiring or upgrading long-term assets. Capital expenditures are normally called CAPEX. The expenses could be recognized as or classed as capital expenditure only if those expenses are allowed to be capitalized as long-term assets according to accounting standards and the company’s accounting
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Fixed assets definition: Fixed assets normally refer to property, plant, and equipment held for use in the production or supply of goods or services, rental to others, or administrative purposes. They are expected to be used by an entity with more than one year accounting period. Those assets included land, building, machinery, cars, computers, and other
Overview: Depreciation and amortization methods are how an entity used to allocate or charge the expenses on fixed assets that the company use for their operational purpose into the financial statements, specifically, in the income statement, in systematic ways based on the method allowed by applicable accounting standards. As we all know, almost all of
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Definition: Depreciation expenses are the expenses charged to fixed assets based on the portion of assets consumed during the accounting period based on the company’s fixed asset policy. The expenses that charge during the period (monthly or yearly) are recorded in the company’s income statement. The accumulation of it is recorded in the accumulated depreciation,
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