Depreciation is a period cost and not a product cost as depreciation is still charged even if there is no production or sale of goods.
Depreciation of administrative equipment is period cost because if production is done or not those assets will be depreciated hence cost will be charged as period cost.
In determining the period of depreciation to be charged, one must consider the cost of the asset and its estimated salvage value. The usual life of the asset must also be considered together with its obsolescence.
Loss by theft will be charged to profit and loss account for that specific fiscal year with the remaining amount after accumulated depreciation till that time period.
Depreciation is a charge to the Profit and Loss account or Income statement that shows the charge to a fixed asset (or group of fixed assets) in that period. Accumulated Depreciation is the total depreciation charged to that fixed asset since it was purchased and is shown in the balance sheet reducing the value at purchase to the value at which it is currently held (its Net Book Value).
straight line depreciation
Depreciation on Capital Expenditure is nothing but Depreciation on fixed assets. Cash Flow statement shows the Capex incurred during the particular time period,i.e. for Quarter or fiscal year. A CAPEX is an amount spent to acquire or improve a long term asset such as plant,equipment or buildings. Usually the cost is recorded in an account classified as Property,plant and equipment.The cost (Except for the cost of LAND) will then be charged to depreciation expense over the useful life of the asset.
The accountant calculated the depreciation of the computer over a period of five years.
Idle asset is that asset which is not utilized in the fiscal year to earn revenue of business. Depreciation of idle asset is not charged for that specific period under which it remained idle.
The three choices available for calculating depreciation are straight line method, Units of production method, and double declining balance method. They allocate different amounts of depreciation but they all total the amount of depreciation. Straight Line Method is when an equal amount of depreciation expense is assigned to each period of asset use. Units of production, according to chapter 7, is a fixed amount of depreciation assigned to each unit of output, service, produced by the assets. It is divided by its useful life. Double declining balance method is an accelerated method that writes off a larger amount of the assets cost near the start of its useful life. It computes annual depreciation by multiplying the assets declining book value by percentage.
Please note that in order to charge depreciation, we must know the expected life of the subject so as to distribute the cost of the stock over that period. However, in case of livestock, the life can't be ascertained i.e. the very basis of calculation ofdepreciation is not available and this must be one of the reasons for not charging depreciation on livestock.