Depreciation reporting

In accounting reporting systems , depreciation of fixed assets of a business, such as buildings , equipment, computers, etc. , are not recorded as an expense money. When an accountant measures profit on the accrual basis , he or she account depreciation as an expense. Buildings, machinery , tools, vehicles and furniture have a limited lifespan . All fixed assets, except for actual land, have limited useful life for a company . Depreciation is the accounting method that allocates the total fixed cost for each year of use to help the company to generate income assets .
Part of the total turnover of business includes recover the cost invested in its fixed assets. In a real sense of a company sells a portion of its assets in fixed selling prices by customers. For example, when you go to the grocery store, a fraction of the price you pay for eggs or bread goes toward the cost of buildings , machinery, bread ovens, etc. Each reporting period , the company gets a party cost invested in its fixed assets.
It is not enough for the accountant to add damping to the benefits the bottom line of the year. Change in other assets and changes in liabilities , also affect cash flow profit . The competent accountant will consider all the changes that determine cash flow profit . Depreciation is only one of many adjustments to the net profit of the business to determine cash flow from operating activities. Amortization of intangible assets is another expense that is recorded in the assets of a business for the year. It is different in that it requires no capital outlay of the year charged to expense. It was then that the company has invested in tangible assets.