Causes of Depreciation | Depreciation Basics | Industrial Management | Industrial Engineering скачать в хорошем качестве

Causes of Depreciation | Depreciation Basics | Industrial Management | Industrial Engineering

Causes of Depreciation | Depreciation Basics | Industrial Management | Industrial Engineering Hi This is Upendra Kumar Malla. Welcome to my channel .I wanted to provide some basic information about Mechanical engineering and Industrial safety . Watch 1000+ latest videos in playlist (    / @upendrakumarmalla   ) those videos may use full to you. Telegram group link 👇👇 https://t.me/joinchat/kBKPMSg2enQ1N2I1 App link -Google play store link https://clpdiy17.page.link/6eZ4 For Desktop / Web access - web link : https://web.classplusapp.com/login Org code: arfxv Depreciation is an accounting term that refers to the systematic allocation of the cost of a tangible asset over its useful life. It represents the reduction in the value of an asset over time due to factors such as wear and tear, obsolescence, or the passage of time. When a company acquires a tangible asset such as machinery, equipment, buildings, or vehicles, it incurs a cost that is typically recorded as an asset on its balance sheet. Instead of expensing the entire cost of the asset in the year of purchase, the cost is allocated over its useful life through depreciation. Depreciation methods: Straight-line depreciation: This is the most common method. It allocates the cost of the asset equally over its useful life. The formula for straight-line depreciation is: Annual Depreciation Expense = (Cost of Asset - Salvage Value) / Useful Life The salvage value is the estimated value of the asset at the end of its useful life. Declining balance depreciation: This method allocates a higher amount of depreciation expense in the earlier years and reduces it over time. It assumes that the asset is more productive and valuable in its early years. There are different variations of this method, such as the double-declining balance method, which applies a fixed percentage of depreciation to the remaining book value of the asset. Units of production depreciation: This method allocates depreciation based on the actual usage or production of the asset. It is commonly used for assets that are expected to have varying levels of usage or productivity. The formula for units of production depreciation is: Depreciation Expense per Unit = (Cost of Asset - Salvage Value) / Total Units of Production Annual Depreciation Expense = Depreciation Expense per Unit × Units of Production Depreciation is recorded as an expense on the income statement, reducing the net income of a company, while the accumulated depreciation is recorded as a contra-asset account on the balance sheet, reducing the value of the asset over time. This allows for the matching of the cost of the asset with the revenue it helps to generate during its useful life. It's important to note that depreciation is an accounting concept and does not necessarily reflect the actual market value or resale value of the asset. #management #depreciation #levelsofmanagement #organisation #typesoforganisations #productionmanagement #materialmanagement #industrialsafety #maintenancemanagement #depreciationaccounting #compitativeexams #stores #storesmanagement