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Tip of the Day Buy A Used Car

Buy A Used Car - Next to a home, the most expensive purchase you are likely to make is a car. When looking to buy a car it is...

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Depreciation

Definition: Long-term assets are depreciated to account for the reduction in economic value over time. 

For example, if you bought a car for $20,000 and intended to keep it for 5 years, it wouldn't make much sense to have it valued at $20,000 on the books at year five.  Instead, you would depreciate it over its useful life.  In year 5, it may only be worth $6,000.

Advice: Depreciation is a figure that many companies may try fidgeting with.  By simply extending the useful life of their assets, this will reduce depreciation expense.  Or some companies will try to reduce the useful life to increase depreciation expense and reduce their taxes.

Depreciation expense is also more important in some industries than others.  For example, it's not very important in real estate because buildings tend to increase in value.

 

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Definition of the Day Income Trust

Income Trust - It is a type of investment trust, which may have holds in the income-producing assets or replacing it in investment. The income that is produced may be passed on to investors or corporations or the unit holder. Example are of the income trusts are the real estate...

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