Principle of Accounting

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Business Finance

Description

Assignment 1: Discussion—Depreciation

By the due date assigned, respond to the following in the Discussion Area below:

  • Discuss how an asset’s cost is determined as well as the two methods of depreciation discussed in your readings.
  • Provide an example of an asset that would be depreciated and demonstrate how the expense would be calculated and reported on the financial statements.

Be sure to cite any sources using APA style. You may use this APA Citation Helperas a guide.

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Explanation & Answer

Attached.

Running head: DEPRECIATION

1

Depreciation
Institutional Affiliation
Date

DEPRECIATION

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In the business world, depreciation refers to the reduction of the recorded cost of fixed
assets such as machinery and office equipment in a systematic manner until the value of the fixed
asset becomes zero or negligible. To determine the cost of an asset, it will be proper to include
the purchase price of the asset being assessed as well as all the expenditures required to prepare
the assets for its intended purpose. For instance, the cost of a vehicle would include the purchase
price, fees used to transport it, sales taxes, the premiums paid for insurance and all the other cost
linked with making the vehicle ready for ...


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