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Tip of the Day Never Spend More Than 2 Times Your Income On A Home

Never Spend More Than 2 ? Times Your Income On A Home - Half the trick to buying a home is knowing what you can afford to spend...

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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 Voting Stock

Voting Stock - A Voting Stock is a stock that comes with voting rights to the holder of this stock. With this voting right, a shareholder can have influence on important matters that involves the company. He or she can also vote for members of the...

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