What is depreciation❓

What is depreciation❓

Depreciation is an accounting principle that is the deduction of fixed asset expenditures each year. Because fixed assets are expensive assets. Depreciation is therefore a deduction of expenses over the useful life of a fixed asset. If no depreciation is made, the money that purchases the asset becomes an expense immediately. This will affect the profit and loss statement of the business. Assets to be depreciated are assets that have a long service life, such as buildings, office machinery, etc.

🔸What are the conditions for calculating net profit under Section 65 bis?

Depreciation is calculated based on the average of the asset acquisition period in each accounting period. If the accounting period is less than 12 months, the average deduction will be based on the accounting period. but not exceeding the percentage of the cost value according to the above asset classes The average is in days, for example Company A has a regular accounting period in a calendar year. Has bought the machine for 300,000 baht on December 1, 2021 will calculate the depreciation as follows

2021 depreciation = 300,000 x 20/100 x 31/365 = 5,095.90 baht

* Assets are depreciated at 20% of their value, which means the asset is acquired for the full accounting period*

In the case of land that is older than 1 year, no depreciation is required. Because the value of the land will have a higher salvage value without decreasing its value. Except for some cases that prove that the land use has deteriorated.

Finally, knowing the depreciation cost makes a good calculation of the profit and loss statement. Do not miscalculate the profit and loss statement. Therefore, depreciation is important and needs to be studied further.

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