What is depreciation?
In accounting terms, depreciation represents the decrease in the value of assets over time. Assets such as cash or heavy equipment are likely to lose value over time due to market conditions, useful life, or other related situations. Understanding the depreciation of your assets can help you better prepare for your tax filings.
When it comes to calculating depreciation, there are three methods commonly used in small business accounting. The first method is straight-line depreciation. Second, there is the “units of production” method. Third, there is the “double declining” method.
Straight-line depreciation is a simple calculation within a small business accounting procedure that uses three figures to determine. The calculator provided above includes options for calculating both straight line and double declining methods. Stay tuned for our series on calculating depreciation using the straight line, units of production, and double declining methods.