Depreciation - what does it mean?
With Depreciation Does mean that you have an item with evaluable fixed assets Because wear in balance sheet Decreased value. This can include buildings, tools or machines, but also patents or rights of use. Since depreciation reduces taxes and profits, companies usually try to reduce them to a residual value. They are prescribed in accordance with Income Tax Act (§7 para. 1 sentence 1 EStG), as acquisition expenditure at Financial statements become relevant.
Why do I have to do it?
The Income Tax Act states that only part of the acquisition costs may be deducted from tax in a financial year because the depreciation takes place over the years of use. This is also known as deduction for wear and tear (AfA) and brings both Pros and cons with yourself: In the year in which a plant is purchased Does spending affect profit significantly. However, the purchase costs cannot be fully estimated. There are no costs in the following years, in which the system wears out due to use. Die Acquisition costs But can tax deducted will be paid off until they are completely written off. If the system continues to be used afterwards, a residual value of one euro remains — the reminder value.
The loss in value may be due to wear and tear, due to weather, legally due to expiry of property rights or even due to consumption due to wear and use. When demand changes, depreciation is due to economic factors.
Depreciation methods: Linear and degressive
There is different methods. At the linear depreciation Do you write the same amount until the asset is completely depreciated at the end of the useful life. The amount is the purchase cost divided by the useful life in years. The linear method is the standard.
At degressive approach Does the form Book value of the previous year is the basis for the amount to be written off. Geometrically degressive means the annual reduction by the same percentage and arithmetically degressive means writing off the degression amount, i.e. the falling amount. This does not therefore remain the same every year, but decreases from year to year. This results in an uneven distribution of degressive depreciation is no longer permitted under tax law.
Vehicles become Depreased based on performance. For this purpose, the acquisition costs are divided by the estimated total mileage in kilometers and then multiplied by the proven route per marketing year to obtain the annual depreciation amount.
At the scheduled depreciation Does that exist Commercial Code the amounts over a specific period of use. Unscheduled Are they due to damage. Die direct or indirect method concerns the process in accounting. From a business perspective, this has the advantage of being able to record fixed and current assets precisely.
