Depreciation

Depreciation is the method of allocating costs to the appropriate period. Although accountants have to follow generally accepted accounting principles (GAAP) for financial statement reporting purposes, they have different allowable methods to consider.

Depreciation is a systematic and rational process of distributing the cost of tangible assets over the life of assets.

- Depreciation is a process of allocation.

- Cost to be allocated = acquisition cost - salvage value

- Allocated over the estimated useful life of assets.

- Allocation method should be systematic and rational.

the types of depreciation methods

straight line method

Straight-line method is a method of depreciation of fixed assets where depreciation expense annually Akiva remained the same until the end of the useful lives of fixed assets.

Double Declining Balance Methode

Double declining method, according to this method, depreciation of fixed assets is determined by a certain percentage is calculated from the price of the book during the year.

sum of the years digit method

Method Number of Number Years, According to the method the total number of years the amount of depreciation each year the number has declined.

Service Hours Method

Hours unit method according to the methods specified expenses Depreciation of Fixed Assets Based on hours of work that can be accomplished in the period.

Productive Output Method

According to the method of production unit method of depreciation of fixed assets is determined based on the number of units of product produced in the period.

depreciation method that has been used in Indonesia, namely straight-line method and the double declining method. because mepermudah in the calculation of depreciation in fixed assets and the tax calculation. straight-line method over time rather than look at aspects of usability aspects. This method is the most widely adopted by companies as the most easily applied in accounting. In the straight-line depreciation method, depreciation expense for each year of the same value and are not influenced by results / outputs diproduksi.sedangkan double declining method is more advantageous because it will reduce taxable income. So basically using the double declining balance method the company has increased the depreciable amount of an asset (in the early years) and also the amount that companies can reduce their tax liability because of the depreciation tax deductible.