Business Finance
Discussion question - Depreciation Concepts

Question Description

I don’t understand this Accounting question and need help to study.

What are the differences among valuation, depreciation, amortization, and depletion?

Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Final Answer

Valuation refers to determining a value for something. For accounting purposes, two common valuation options are fair market value and historical cost (net depreciation).

.

Depreciation is an adjustment to the net income of an entity for wear and tear of fixed assets. The adjustment for depreciation is (in theory) to expense assets over the term of their useful lives.

.

Amortization is an adjustment to the net income of an entity to expense costs of intangible assets over the estimated useful life of the asset (example: writing off the costs of a noncompete agreement over the life of the agreement).

.

Depletion is an adjustment to the net income of an entity to record the use or harvesting of its petroleum, minerals, timber, or other reserves.

.

Accumulated depreciation, accumulated amortization, and accumulated depletion accounts are kept as contra accounts to the historical acquisition price of fixed (tangible) assets being depreciated, intangible assets being amortized, and reserves being depleted.


sobia (165)
Purdue University

Anonymous
I was on a very tight deadline but thanks to Studypool I was able to deliver my assignment on time.

Anonymous
The tutor was pretty knowledgeable, efficient and polite. Great service!

Anonymous
Heard about Studypool for a while and finally tried it. Glad I did caus this was really helpful.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors