$140,000 is the value of the property using the cost approach for a property was originally purchased for $160,000. The land portion is 25% of total value. If depreciation totals $20,000.
If the depreciation totals $20,000 then $160,000-$20,000 = $140,000
The accounting technique of depreciating an asset throughout its useful life is referred to as depreciation. Depreciation is a measure of how much an asset has been used for. By paying for assets over a specific amount of time, it enables businesses to generate income from the ones they possess.
The initial cost of ownership is drastically lowered because businesses are not required to fully account for them in the year the assets are purchased. The profitability of a corporation may suffer significantly if depreciation is not taken into account. For both tax and accounting reasons, businesses can depreciate long-term investments.
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