What Are the Basic Depreciation Rules?
Depreciation rules apply to any asset that loses its value over the time that the particular asset is used. Knowing these rules is essential to businesses when filing tax returns, because the asset is expensed according to the value it currently holds, as opposed to its original value. Many factors determine the depreciation rules for assets, including how long they are expected to last, what type of asset it is, and how the asset is used. Different methods, like the straight-line method or declining balance method, are used to depreciate assets, depending upon which specific rules apply. Certain assets, like a computer, a business vehicle, or a piece of machinery, lose their value as time passes, a process known as depreciation. This is a crucial concept for accounting purposes, because the value of the asset cannot be expensed as if it is brand new for the entire time that it is used. For that reason, depreciation rules must be understood by businesses so they can follow the relevant
