Editing Fixed asset (section)

== Depreciating a fixed asset ==
[[Depreciation]] is the expense generated by using an asset. It is the wear and tear and thus diminution in the historical value due to usage. It is also the cost of the asset less any salvage value over its estimated useful life. A fixed asset can be depreciated using the straight line method which is the most common form of depreciation. [[Tax]] depreciation is commonly calculated differently than depreciation for [[financial statement|financial reporting]].<ref>{{Cite web |title=Depreciation: Definition and Types, With Calculation Examples |url=https://www.investopedia.com/terms/d/depreciation.asp |access-date=2025-04-23 |website=Investopedia |language=en}}</ref><ref>{{Cite web |title=Depreciation Methods Template |url=https://corporatefinanceinstitute.com/resources/financial-modeling/depreciation-methods-template/ |access-date=2025-04-23 |website=Corporate Finance Institute |language=en-US}}</ref><ref>{{Cite web |last=CEPF® |first=True Tamplin, BSc |title=Depreciation {{!}} Causes, Methods of Calculating, and Examples |url=https://www.financestrategists.com/accounting/depreciation-and-disposal-of-fixed-assets/depreciation/ |access-date=2025-04-23 |website=Finance Strategists |language=en-US}}</ref>

=== Straight-line depreciation ===
Straight-line depreciation is the simplest and most often used method. The straight-line depreciation is calculated by dividing the difference between assets pagal sale cost and its expected salvage value by the number of years for its expected useful life. (The salvage value may be zero, or even negative due to costs required to retire it; however, for depreciation purposes salvage value is not generally calculated at below zero.) The company will then charge the same amount to depreciation each year over that period, until the value shown for the asset has reduced from the original cost to the salvage value.<ref>{{Cite web |title=Straight Line Depreciation |url=https://corporatefinanceinstitute.com/resources/accounting/straight-line-depreciation/ |access-date=2025-04-24 |website=Corporate Finance Institute |language=en-US}}</ref><ref>{{Cite web |title=Straight Line Depreciation Method {{!}} Explanation & Examples |url=https://accounting-simplified.com/financial/fixed-asset/depreciation-methods/straight-line/ |access-date=2025-04-24 |language=en-us}}</ref>

'''Straight-line method:'''

: <math>\mbox{annual depreciation expense} = {\mbox{cost of fixed asset} - \mbox{residual value} \over \mbox{useful life of asset} (years)}</math>