What are some examples of depreciation in accounting?

What are some examples of depreciation in accounting?

Depreciation is the allocation of the cost of a tangible asset over its useful life. Common examples include vehicles, machinery, and buildings.

Can you explain how straight-line depreciation works?

Sure! Straight-line depreciation spreads the cost of an asset evenly over its useful life. For example, if a machine costs $10,000 and has a useful life of 10 years, the annual depreciation expense would be $1,000.

What about accelerated depreciation methods?

Accelerated depreciation methods, like double declining balance, allow for larger depreciation expenses in the early years of an asset's life, which can provide tax benefits.

Are there any tax implications for using different depreciation methods?

Yes, different methods can affect your taxable income. Accelerated methods may reduce taxable income in the short term, while straight-line may provide more consistent expenses over time.