Depreciation (depreciation) and Depreciation is an accounting term referring to the fact that the records shows the cost of depreciation of fixed assets and thus occupy the company's assets at fair value.
Depreciation also aims to allocate the cost of an asset over the asset's economic life, ie the same time as the asset contribution to revenue (matchningsprincipen).
It is important to distinguish between the costs and expenses in order to understand the purpose of depreciation - a charge should not be confused with a cost as an expense incurred in connection with the resource consumed and not when the asset is purchased (expenditure).
Expenditure affects the income never, but it does however cost.
Avskrivningstid
The basic rule is that depreciation occurs during the asset's economic life with the annual amount equal to the approximate value of decline (Accelerated depreciation). The period of depreciation, avskrivningstiden, must not be longer than the useful life and is determined when the asset is acquired.
The amortization period may include 5 years for a car, 10 years for a truck and 33 years for a building. This means that if a car purchased for a million dollars so will the annual cost 100 000 kr for ten years. This type of depreciation is called planned or book depreciation. Fixed assets are not depreciated by wear and tear, such as land, written not by.
The legislation provides some leeway to make tax for depreciation or överavskrivningar (Accelerated depreciation), which is common in business. Because depreciation is a cost impact on the size of these namely profit and hence tax on any gain. This provides an opportunity for companies to smooth out the results over the years between good and bad years. When the company uses this facility will be a difference between the flat-rate and the tax depreciation. This gives some room for companies to tax planning in connection with the financial statements and is one of several possible allocations.
Factors affecting depreciation is governed by generally accepted accounting principles and previous accounting principles in the company. It may be outright illegal to change the amortization period after the event, once you have started to depreciate.
Avskrivningsmetoder
The most common depreciation methods are straight-line, accelerated depreciation and progressive depreciation.
Straight line depreciation
At linear depreciation, depreciation of the asset by equal installments each year. Straight line depreciation is the most common method of depreciation because it is easy to administer when depreciation occurs in equal amounts each year. Most accounting software has complete functions for calculating depreciation often every month.
Sliding scale avskrivning
At digressive avskrivning depreciation is greatest during the early years and decreases towards the end of the amortization period. The advantage of this method is that it often mirrors the true depreciation of an asset.
Progressive depreciation
Progressive depreciation means the opposite of accelerated depreciation, that depreciation increases gradually. This method may be appropriate for assets with long life and with less advanced technology.
Production Depending depreciation, finally, means that depreciation varies according to the estimated future production or utilization of the asset.