Mariana Radu showed in her articlethat how to record depreciation expenses in management accounting in Romania. Thepurpose of this research is to show the impact of depreciation methods on costsused in Romania. She used boththeoretical research on the concepts of theories and regulations in the fieldexisting so far and also empirical research by presenting case studies tryingto find solutions to the problems as mentioned in the article.
Depreciationalways create a negative impact on cost according to Mariana Radu ResearchArticle.Discussion:After the outcomes acquired for thesituation thinks about introduced above we can presume that deteriorations,other than straight-line, when rehearsed, unequally stack expenses ofprogressive periods. Number one speculation is in this way approved. The secondtheory is likewise approved, the introduced repetitions of deterioration costsin money related bookkeeping going for a discerning assurance of the creationcosts computed in administration bookkeeping. The deterioration incorporationinto expenses ought to think about the degree of use of creation limit. Everyyear should be recalculated the devaluation included into costs in view of thepresent estimation of the advantage and the likely term of utilization.Additionally, the advantages must be really working and devaluation costs mustbe fused into the cost as long as the benefit is utilized, regardless ofwhether it is completely deteriorated in monetary bookkeeping.Results: Mariana Radu had done the research onthe topic impact of depreciation on cost by analyzing the theoretical researches,regulation in this particular field and also presenting case studies on thetopic to get the problem solution that appeared with this research.
Methodology: Many researches had been done on theimpact of depreciation methods on cost. Some ?rms and individuals had beendiscussed the regulation influences in the theoretical and empirical taxliterature. Due to progressive tax system’s Straight line method might besuitable if there are some growing and stable cash flows while accelerateddepreciation method (DDM and SOYDM) provides discount benefits. Straight linemethod is also used if taxation authorities allows to switching thedepreciation method. Accelerated deprecation method reduces the amount oftaxable income of an asset in the early life and the tax liabilities aredeferred so that the company had to pay the more income taxes in the lateryear.Literature Review:Introduction: Depreciationis the process to calculate the decreasing value or Out dated depreciable valueof Long lived assets (Fixed Assets) like: Building, vehicles, Furnitures,Machinery and office Equipments .Some fixed assets cannot be depreciated ForExample: Land etc.
Current assets cannot be depreciated just because of theirtime period. Fixed Assets are those assets which have a time period more than 1year. Abstract: Depreciationhas no concern with the market value of fixed assets.
Which may veryconsiderable from the net cost of the asset at any given time. Depreciation hasa major issue in the calculation of the company’s cash flow because it isincluded in the calculation of net income. The Accumulated depreciation accountis a contra account that will appears on the balance sheet as a deduction fromthe original purchase price of an asset .
In the recording of depreciation, itshould be debit in the depreciation expense account and credit to theaccumulated depreciation account. If an asset will not fully depreciated atthat time of its disposal then it will also be necessary to record a loss onundepreciated portion. IMPACTOF DEPRECIATION ON COST