How to Calculate Depreciation: Straight Line and Diminishing Value Examples
How to Calculate Depreciation: Straight Line and Diminishing Value Examples Depreciation explained What is depreciation? How to calculate depreciation? Depreciation, amortization, and CapEx tutorial. Overview of depreciation accounting (concept and application), and related topics such as accumulated depreciation, book value, residual value, historical cost, fixed assets, amortization, useful life, capital expenditures (CapEx), and capitalization. Intended for students and business people at both entry and advanced levels. How does that work? Let's assume you want to buy a truck for your company. You spend $100,000 to buy it. We usually call that an investment in fixed assets. You could also call it capital expenditures, CapEx in short. What happens on your balance sheet (the overview of what you own and what you owe) is that cash goes down by $100,000, and your fixed assets (or "plant and equipment") go up by $100,000. It would be incorrect to book the full $100,000