3 ms·
A car is depreciated on the books per standard rules and traditions, generally around 5 years. Computers are depreciated around 3 years. The above is true onl
by jotto 18y ago
A car is depreciated on the books per standard rules and traditions, generally around 5 years.
Computers are depreciated around 3 years.
The above is true only if a purchase is "capitalized" and classified as an asset. This "depreciation" allows you to deduct a loss per that 3 or 5 years on your taxes, or incrementally decrease your assets on your balance sheet.
If it is not capitalized and classified as an asset, it is an expense. An expense is noted on the income statement and the entire cost is accounted for in that quarter.
- arockwell 18y agoI think we're really talking about two different things. You're talking about depreciation as it applies for tax purposes. I'm talking about what's the actual price of a used car. Depreciation tries to make a baseline guess at what rate the value of car will fall, but does not set the actual price of the car in the market.
- jotto 18y agoyou're right, we are talking about 2 things, and your approach is more accurate - however. most entities will value an asset based off of a formula, not market price.