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In accounting, the residual value could be defined as an estimated amount that an entity can obtain when disposing of an asset after its useful life has ended. When doing this, the estimated costs of disposing of the asset should be deducted. [5] The formula to calculate the residual value can be seen with the next example as follows:
The relevant book value in this case is determining the tax gain or loss of the asset. The tax basis then is the difference between the original cost and any accumulated depreciation. The disposal tax effect (DTE) is also calculated by getting the difference between the UCC cost and the salvage value and then multiplying it by the tax rate (TR).[1]
An asset depreciation at 15% per year over 20 years [1] In accountancy, depreciation refers to two aspects of the same concept: first, an actual reduction in the fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are ...
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, [1] pronounced / ˈ iː b ɪ t d ɑː,-b ə-, ˈ ɛ-/ [2]) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base.
That is, the mark-down in value of the asset should be recognised as an expense in the income statement every accounting period throughout the asset's useful life. [1] The useful life of the asset is determined by taking into account expected usage, physical wear and tear, technical or commercial obsolescence arising from changes in production ...
Terminal value (accounting), the salvage or residual value of an asset; Terminal value (finance), the future discounted value of all future cash flows beyond a given date; Terminal value (philosophy), core moral beliefs; Terminal value in Backus-Naur form, a grammar definition denoting a symbol that never appears on the left-hand side of the ...
Deprival value is a concept used in accounting theory to determine the appropriate measurement basis for assets. It is an alternative to historical cost and fair value or mark to market accounting. Some writers prefer terms such as 'value to the owner' or 'value to the firm'.
Amortization is the acquisition cost minus the residual value of an asset, calculated in a systematic manner over an asset's useful economic life. Depreciation is a corresponding concept for tangible assets. Methodologies for allocating amortization to each accounting period are generally the same as those for depreciation.