Andrew
The method, the rate and the period of depreciation are decided upon
by the depreciator. There are conventions, but as long as the drop is
reasonable (and no one is being defrauded) the auditors, shareholders
and tax man will accept it. As you suggest, amortisation could be
considered the completed depreciation of the asset, but the terms are
pretty well interchangeable, generally, with amortisation used
sometimes after the fact (and depreciation during ...).
I love using old Macs, but I'm not clever enough to use them as
servers etc ...
Chris
On 22 Aug 2008, at 10:08, Andrew Fildes wrote:
>
> As I understand it, depreciation operates at a percentage rate per
> year of the residual value so while the value of the asset may drop
> to low levels, it can never reach zero. It's good for durable items.
> Amortisation allows the item to 'die' within a set period of time by
> depreciating by a percentage of the starting value, not the residual.
> Consequently a Mac should be depreciated in the conventional way but
> a Windoze machine amortised as it's useless within a short time. :-)
>
> Andrew Fildes (who just bought a 7 year old long amortised Mac G4
> tower for $50, installed a bit more ram, CS1 and OSX-3 and has it
> working just fine thanks).
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