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In accounting, adjusting entries are journal entries usually made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred. The revenue recognition principle is the basis of making adjusting entries that pertain to unearned and accrued revenues under accrual-basis accounting .
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.
In tax accounting, adjusted basis is the net cost of an asset after adjusting for various tax-related items. [1] Adjusted Basis or Adjusted Tax Basis refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures. Example: Muhammad buys a lot for $100,000. He then erects a retail ...
An asset depreciation at 15% per year over 20 years. 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 used ...
Depreciation allocates the cost of an asset over its expected lifespan according to the matching principle. For example, if a machine is purchased for $100,000, has a lifespan of 10 years, and produces the same amount of goods each year, then $10,000 of the cost (i.e., $100,000 divided by 10 years) is allocated to each year.
Examples are accumulated depreciation (offset against fixed assets), and the allowance for bad debts (offset against accounts receivable). Deferred interest is also offset against receivables rather than being classified as a liability. Contra accounts are also often referred to as adjustments or adjusting accounts.
the depreciation method(s) used; the useful lives or depreciation rates; the gross carrying amount and accumulated depreciation and impairment losses; a reconciliation of the carrying amount at the beginning and the end of the period, showing: additions; disposals; acquisitions through business combinations; revaluation increases or decreases ...
Depreciation recapture is the USA Internal Revenue Service procedure for collecting income tax on a gain realized by a taxpayer when the taxpayer disposes of an asset that had previously provided an offset to ordinary income for the taxpayer through depreciation.