An Accounting Question about Depreciation?
Could someone give me an explaination on why depreciation is charged to the profit and loss accounting in respect of a company’s fixed assets, even if they have been revalued upwards as a result of an increase in their market price.
Other - Business & Finance - 4 Answers
People Answers, Critics, Comments, Opinions :
Answer 1 :
Because of the matching principle. Expense has to be charged to revenue. However, this rule does distorts the true economic value of a company. Real estates that have gone up in value is written down to the pennies on the books. This in part explains why LBO are so active. There are tons of hidden assets on the books of large cap.
Answer 2 :
Becouse Loss&profit Acount is state in historical value n market value is ignore. it also approve matching concept which revenue must compare with expenses in one accounting period.
Answer 3 :
r u trying to get us to answer ur exam questions ???
Answer 4 :
so they pay less tax
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