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The period is usually determined bu the loval laws and regulations. You may choose within the legal periods depending on the quality of the asset and the resulting profitability of the subject produt(s)/service(s)
Sorry Ahmed, I cannot answer this question, I do not have any interactions with this
Depreciation is a policy and the life of each aset class is determined by the Accountant General of India. For instance, the life of a Generation Project asset is25 years and that of Distribution asset are in the range of5 to10 years. period of depreciation is used as a means for promotiing any particular industry because depreciation for accounting purpose is considered as an expenditure, but the money is retained and can be utilised for further investment. A lesser depreciation period allowed means, your investment is paid back quickly without reflecting in the profit. For R&D, IT indusry etc lesser period to the enetent of even2 years are allowed. Usually asset will be depreciated by following a straight line depreciation method through out the period allowed till90% of th Asset Value is depreciated and the balance is treated as scrap value. Pofit can be realised by selling the scrap which sometimes exceeds the original asset value especially in asets containing precious metals like copper.
same position with arinjay,,,
The way I do it is to divide the cost (purchase price) over the lifetime of the item purchased
So, if I buy something at $1000 cost and its life time is5 years ,,, then the depreciation peercentage is20% and the depreciation period is5 years !!
If in other situations, there are complelling reasons to take higher or lower depreciation rates, then the purchased item may reach zero book value much earlier or later than the expiry/obsolecence/depreciation of the product
Let us say for example that someone or something forced10% depreciation rate on us for something whose lifetime is5 years only. Then after5 years ... the depreciation would be50% while the item lifetime is consumed completely !!
If on the other hand, someone or something forced25% depreciation rate on us for an item whose lifetime is5 years ... then the product would be fully depreciated in4 years while there is still1 more year in the lifetime of the item.
Agree with Mss : Saria alameddine
I am sorry I do not have relevent experience, so I cannot give an appropriate answer you are looking for.
Agree with Mr.Mohammad statement. Additionally Your need to hire skilled & smart Accountant. Because the problem of depreciation calculating means taxes payment strategy and Your relations with bank
The period of Depreciation is calculated based upon the Average Life Cycle of the Asset and the Tax Laws of the country as the same has a direct impact on the Balance Sheets & P&L Accounts and Taxes are calculated based upon the same.
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