How does depreciation work in Fixed Assets Management?
Depending upon the type of fixed assets you own – and upon your specific company policy – it’s likely that you’ll capitalize many of your fixed assets. Many short-term business expenses are immediately written off as expenses. If an item is capitalized either by choice or by law, however, the expense of that asset is actually viewed as a business asset, and is then written off over a period of years through depreciation. Because of their expense and durability, many fixed assets are capitalized, so it’s necessary to possess at least a basic understanding of depreciation. In its simplest expression, depreciation involves the portioning of the cost of an asset over the estimated useful life of that asset. The cost of the asset includes the purchase price and any other indirect costs of the asset, such as shipment and installation. It’s also important to note that, for depreciation purposes, the useful life of an asset is not necessarily an estimation of its ability to perform, because th
