Straight line method spreads an asset's cost evenly over its life, aiding in clear financial planning. Using this method simplifies financial statements, making a company's health easier to assess.

The goal of accounting is to produce fair and accurate statements about a company's financial performance and condition. An underlying principle of accounting is to connect the expenses that are ...

To increase supplemental income, a company's senior management might consent to all kinds of strategically sensible deals, including those that require the company to receive money in advance and ...

Depreciation expense can be a big portion of a company’s total expense. And since expenses decrease income, it affects the overall value of a company. Understanding what it is and the methods can help ...

Assets like equipment, vehicles and furniture lose value as they age. Parts wear out and pieces break, eventually requiring repair or replacement. Depreciation helps companies account for the ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Depreciation is the recovery of the cost of a physical asset, like property or equipment, over multiple years. It allows companies to spread out the cost of some expenses, reduce taxable income and ...

Over time, the assets a company owns lose value, which is known as depreciation. As the value of these assets declines over time, the depreciated amount is recorded as an expense on the balance sheet.