Question A company had the following infomration (no dispositions were recorded in the year) 2021 2022 1,200,000 (750,000) 450,000 Fixed assets gross Less Accumulated depreciation Net fixed assets 1,000,000 (500,000) 500,000 250,000 (50,000) 200,000 300,000 (75,000) 225,000 Intangibles gross Accumulated amortization Intangibles, net What is the dollar impact on cash generated from operations (first section of cash flow statement) Enter a negative number with a

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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.