Well, it been more than a few days, but here are the changes I propose for the concept guide.
David-
Thanks for the text updates, let's discuss a bit. let's begin with the opening paragraph of the Basic Concepts section, which should introduce and define depreciation.
Original text:
This chapter will present some of the techniques used to keep track of the changing values of assets, IE: depreciation, unrealized gains, capital gains.
(this is obviously bad, since this chapter does *not* discuss capital gains...)
Your text:
One of the basic concepts in accounting is the matching of revenues and expenses. When you purchase a capital asset (e.g. car, computer, equipment), you will use this asset to earn income for a number of years. Instead of expensing the cost of the asset in the year it was purchased, you expense a portion of the cost each year in a manner that matches flow of revenue. This process is called depreciation.
I like your text, except that it seems to be very tax oriented. If I (as an individual) buy a new car, I may want to track the car's depreciation, so that I have an estimate of my personal net worth for any given year. No tax implications, just simple book depreciation.
I'm thinking we should introduce the concepts of book versus tax depreciation. Agree?
I found this: http://coen.boisestate.edu/mkhanal/deprecia.htm
Another idea I have is that maybe we should have a list of terms and definitions? Here are a few, any others?
Book depreciation: Tax depreciation: Cost basis: cost of the capital item plus incidental costs Salvage value:
-- -**-*-*---*-*---*-*---*-----*-*-----*---*-*---*-----*-----*-*-----*--- Jon Lapham <[EMAIL PROTECTED]> Rio de Janeiro, Brasil Personal: http://www.jandr.org/ ***-*--*----*-------*------------*--------------------*---------------
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