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Finance for IT Decision Makers - A practical handbook by Michael Blackstaff

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8 DEPRECIATION OF IT ASSETS

OBJECTIVES

When you have studied this chapter you should be able to:

  • explain what depreciation is and what problems can be caused by the particular characteristics of IT assets;
  • describe what is meant by ‘loss on disposal’ and explain what accounting and IT policies might help to avoid or minimise it;
  • recommend an appropriate method for the depreciation of upgradable IT assets.

DEPRECIATION OF IT ASSETS

Take any dozen organisations and you will find as many different approaches to the depreciation of IT assets. Some methods cause an artificially high or low charge to the income statement and to budgets in the year of acquisition. Some approaches to the depreciation of upgrades have the effect of causing depreciation ...

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