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| Subject: Re: Hi Pete ---Joan--non cash is it? depreciation?----Stevo | |
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Author: Peter I love you---Joan---Steve |
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Date Posted: 05:51:40 01/03/03 Fri In reply to: one-off non-cash 's message, "Re: Hi Pete ---Joan---one off non cash is it----Cheers." on 05:39:06 01/03/03 Fri The depreciation method chosen by management should be the one which reflects most accurately the use of the asset. ----------------------------------------------------------- The asset wears out during the process of producing goods and services. It is a cost of daily business just like salaries and is therefore treated as an operating expense and charged against revenue. Depreciation follows the principle of matching. Revenue earned is matched with the relevant portion of wear and tear of equipment used to produce the goods or service. ----------------------------------------------------------- This usage is recorded as an expense--depreciation--in the profit and loss statement. ----------------------------------------------------------- However you should note that this operating expense is a non cash expense because the cash was paid (or perhaps borrowed) at the time of obtaining the asset. ----------------------------------------------------------- Therefore, cash is not reduced by charging depreciation expenses. Any cash the entity has is still available for use in other areas of the business or for investment towards covering the cost of purchasing new fixed assets. ----------------------------------------------------------- [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| Re: Hi Your still Peter Fogarty to me Pete----Stevo | No name | 06:08:30 01/03/03 Fri |
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