Accounting glossary
What is depreciation?
Recognizing that long-lived assets wear out by expensing a slice of their cost each period. The books version follows your policy; the Canadian tax version is CCA with prescribed classes and rates. Both exist to stop year one from absorbing a cost year five helped consume.
Example
A $30,000 van depreciated straight-line over five years takes $6,000 of expense each year, leaving a book value of $24,000 after year one.
For tax, the same van follows CCA rules instead — a class, a declining rate, and the half-year rule in year one. The two figures legitimately differ.
In SeroBooks
Recorded per asset with CCA classes and the half-year rule, posted to the ledger. Fixed assets & CCA →
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