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| *Ostroff, Fair and Company>>>Australia Taxes |
What does 'rate of depriciation mean ' ? what does it mean "rate of depriciation has been increased in budget |
What does 'rate of depriciation mean ' ? what does it mean "rate of depriciation has been increased in budget Depriciation is what the government allows a business to deduct from one's income taxes. It is like for usage or wear and tear. A building can be depriciated over 20 years. Example; it cost $100,000 to purchase the bldg, over 20 years you can take 1/20 each year off your or the companys taxes ie $5,000. There are other depriciation factors that can be used. This is called straight line and is a simple way to explain it. To answer your question, it would appear that one of two things have happen. A number of expenditures were purchased over the year and therefore, would "increase the amount of depriciation" or depriciation rates have been changed, which is not a good thing to do. Rate of depreciation refers to how fast a product loses its value over time. For example, computers have a high rate of depreciation because a computer that is top-of-the-line today will be obsolete in five years, so if you pay $3,000.00 for that top-of-the-line computer today it'll only be worth about $100.00 in five years. On the other hand, certain items tend to increase in value over time (like grandfather clocks or diamond jewelry), so they have a low rate of depreciation, if they depreciate at all. This concept is used in business to estimate the "life cycle" of all kinds of things like desks, chairs, computers, machines, etc. For example, if a computer depreciates at the rate of 20% per year, that computer will be considered worthless in five years, so companies could set up a budget whereby computers are replaced every five years. Now, you don't have to replace all the computers at once, so you could set up a system where you replace a certain amount of computers every year. Using this system helps a business plan for future expenses. Does this help? Try going to your local tax board's site. Terms are usually listed there. |
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