These items are taken from the financial statements of Riverbed Corp. at December 31, 2022 Buildings Accounts receivable Prepaid insurance Cash Equipment Land Office expense Income tax expense $105,800 11,800 4,680 11,840 83,000 60,200 580 200
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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