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JVasquez102461
Level 2

Depreciation

Team,

 

How do I explain in plain English item:

 

2025 Accumulated Depreciation?

 

Dont want to scare off anyone with a technical explanation, since it comes out on negative numbers.

 

Thanks.

Solved
Best answer July 06, 2020

Best Answers
john-pero
Community Champion

Depreciation

Try this:

 

Accumulated Depreciaton is not an expense. It is  Fixed Asset. It is the sum total of Depreciation expense taken over time as a reduction in current value of Fixed Assets. It is applied on the balance sheet against the positive values of the corresponding Fixed Assets subject to depreciation

 

Fixed Assets, in the normal course of business, cannot be straight expensed but must be depreciated, and the depreciation expense taken over the projected life of the asset (based on IRS tables). The annual depreciation charge is an expense, but it is offset by a decrease in present value of Fixed Assets and thus lands in Accumulated Depreciation

 

From time to time accelerated depreciation is allowed which speeds up the depreciation process and does allow current year full or bonus depreciation, but that bonus depreciation expense still adds negatively to Accumulated Depreciation

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2 Comments 2
john-pero
Community Champion

Depreciation

Try this:

 

Accumulated Depreciaton is not an expense. It is  Fixed Asset. It is the sum total of Depreciation expense taken over time as a reduction in current value of Fixed Assets. It is applied on the balance sheet against the positive values of the corresponding Fixed Assets subject to depreciation

 

Fixed Assets, in the normal course of business, cannot be straight expensed but must be depreciated, and the depreciation expense taken over the projected life of the asset (based on IRS tables). The annual depreciation charge is an expense, but it is offset by a decrease in present value of Fixed Assets and thus lands in Accumulated Depreciation

 

From time to time accelerated depreciation is allowed which speeds up the depreciation process and does allow current year full or bonus depreciation, but that bonus depreciation expense still adds negatively to Accumulated Depreciation

JVasquez102461
Level 2

Depreciation

Thank you for such a great and substantial response.

 

My only fear now is - How do I explain this in lame terms?

Thank You.

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