Revising Depreciation Estimates
Depreciation for Tax Considerations
This subchapter explains the rationale behind depreciation and demonstrates methods of calculating depreciation on your fixed assets and recording the expense on your books or on the tax return.
Over time, all PP&E assets, with the exception of land, experience a decrease in usefulness. Buildings and autos suffer wear and tear; machinery becomes obsolete; and land improvements erode with age. To reflect this decline in value, accountants use depreciation, which is essentially a way to allocate the cost of an asset to expenses over its years of service.
To depreciate an asset, ...