A method of calculating the depreciation on a fixed asset designed to produce a constant annual charge that includes both depreciation and the cost of capital.
The depreciable amount is the value of a fixed asset used as the basis for calculating the depreciation charge for a specific period.
Depreciation is a measure of the decrease in value of tangible fixed assets during a given accounting period, reflecting wear and tear, obsolescence, or reduction in useful economic life. It can be relevant for both accounting and currency valuation contexts.
The percentage rate used in various methods of depreciation to determine the amount of depreciation that should be written off a fixed asset and charged against income or the profit and loss account.
Equal-Instalment Depreciation, also known as the straight-line method, is a simple and commonly used depreciation method where an asset's cost is evenly spread over its useful life.
Linear depreciation involves writing off a constant amount of an asset's value every year, resulting in a straight-line graph when the depreciation expense is plotted against time.
The original cost refers to the initial amount paid to acquire an asset, which is used as the basis for financial reporting and depreciation calculations.
Residual value, also referred to as disposal value or net residual value, represents the expected proceeds from the sale of an asset, net of the costs of sale, at the end of its estimated useful life.
A reverse premium, also known as a lease incentive, is a cash payment made by the lessor to the lessee to encourage the latter to enter into a lease agreement.
A method of calculating the amount by which a fixed asset is to be depreciated in an accounting period, using a constant annual depreciation charge against profits year by year.
The straight-line method of depreciation is a calculation method whereby an equal amount of an asset's cost is allocated as an expense for each year of the asset's useful life. This method is commonly used for accounting and tax purposes.
