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.

When companies invest in assets, they expect those assets to last a certain number of years. Over time, they’re depreciated based on their remaining serviceable life and any potential saleable value ...

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 ...

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 ...

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 ...

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 ...

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 ...

Over time, the value of a company's capital assets decline. This is a normal phenomenon driven by wear and tear, obsolescence, and other factors. This depreciation in the asset's value must be ...