For financial reporting purposes, GAAP requires organization costs to be capitalized and treated as an intangible asset with an indefinite life. capitalized and amortized over the first five years of the company's existence. expensed in the period in which they are incurred. capitalized and amortized over 20 years.
For financial reporting purposes, GAAP requires organization costs to be capitalized and treated as an intangible asset with an indefinite life. capitalized and amortized over the first five years of the company's existence. expensed in the period in which they are incurred. capitalized and amortized over 20 years.
Chapter1: Financial Statements And Business Decisions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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For financial reporting purposes, GAAP requires organization costs to be
capitalized and treated as an intangible asset with an indefinite life.
capitalized and amortized over the first five years of the company's existence.
expensed in the period in which they are incurred.
capitalized and amortized over 20 years.
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