business and finance

timer Asked: Jul 15th, 2014
account_balance_wallet $5

Question Description

how do you differentiate between valuation, depreciation, amortization, and depletion. Is it appropriate to calculate depreciation using two different methods? Why?

Tutor Answer

School: Rice University

valuation identifies figuring out a price intended for something. With regard to accounting purposes, a couple common valuation possibilities are fair market price in addition to traditional expense (net depreciation).


depreciation can be an adjustment for the net gain associated with an thing intended for wear and tear connected with fixed resources. The actual adjustment intended for devaluation is actually (in theory) to be able to cost resources on the expression of these useful lifestyles.


Amortization can be an adjustment for the net gain associated with an thing to be able to cost charges connected with intangible resources on the believed useful existence from the resource (example: producing over charges of a noncompete deal on the existence from the agreement).


Depletion can be an adjustment for the net gain associated with an thing to be able to record use or even farming connected with the oil, vitamins and minerals, hardwood, or even additional supplies.


accumulated depreciation, acquired amortization, in addition to acquired depletion company accounts are maintained as contrast company accounts for the traditional exchange selling price connected with fixed (tangible) resources becoming depreciated, intangible resources becoming amortized, in addition to supplies becoming lowered.

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