All you need to know about asset depreciation

May 26, 2020 3:30 pm

Category:

Asset depreciation is just one small part of what an Accountants Cheltenham way can help their clients with. It is an important part of accounting for those that have tangible assets as a part of their business. If this is you then you should consult with a Cheltenham Accountants based near shurdington to make sure that depreciation occurs with your assets.

Image Credit

Here are a few facts about this important accounting task.

Depreciation is where a tangible business asset (one that you can touch) loses some of its value over time. For example  if you buy a computer during the first few weeks of starting your business its value is much higher than it will be two years later. This needs to be factored into your assets throughout the time of your accounting.

Image credit

Depreciation occurs as a way in which to know the true value of your business. The reduction in the costs of your assets is one way to ensure that you are aware of how your overall business value is progressing.

It also has an implication on your tax position as it lowers your profits. This is why depreciation takes part each year during your annual tax reporting. There are rules around how much you can claim for an asset depreciating and this is where you need the expertises of an accountant.