What Is Written-Down Value?

Written-down value is the value of an asset after accounting for 澳洲幸运5开奖号码历史查询:depreciation or 澳洲幸运5开奖号码历史查询:amortization. In short, it reflects the present worth of a resource owned by a company from an accounting perspective. This value is included on the com🐻pany's balance sheet in its financial statements.

Written-down value is also called 澳洲幸运5开奖号码历史查询:book value or net book value.

How Written-Down Value Works

In accounting, there are various 澳洲幸运5开奖号码历史查询:conventions designed to better match sales and expenses to the period in which they are incurred. One approach that companies often embrace is referred to as depreciation or am𒁏ortization.

Companies generally use depreciation for 澳洲幸运5开奖号码历史查询:physical assets, such as machinery, and amortization for 澳洲幸运5开奖号码历史查询:intangible assets, such as patents and software. Both methods permit firms to expense resources of economic value over a longer timeframe. In other words, rather than deduct the full purchase price from 澳洲幸运5开奖号码历史查询:net income (NI) right away, companies can stﷺretch the cost of assets over many different periods.

For example, if a company bought a piece of machinery, it wouldn't have to expense it in the year that it was bought but can stretch out the cost of the machinery over a number of years until it is sold or disused; a period known as its 澳洲幸运5开奖号码历史查询:useful life.

Written-down value is a method used to determine a previously purchased asset's current worth and is calculated by subtracting accumulated depreciation or amortization from the asset's original value. The resulting figure will appear on the company's 澳洲幸运5开奖号码历史查询:balance sheet.

Amortization Methods

Amortization can be used to 澳洲幸运5开奖号码历史查询:write-down the value of debt or intangible assets and is slightly more complicated than 🍎depreciation methods. The asset’s book value is reduced on the company’s books according to a set schedule.

Various methods can be used for amortizing different types of assets. Intangible assets, such as patents, are typically written-down annually. Bonds, on the other hand, often use an 澳洲幸运5开奖号码历史查询:effective interest method of amortization.

Meanwhile, amortization schedules for outstanding loans normally follow the repayment schedule of the loan with differentiation for interest and principal. Some additional amortization methods are also available including 澳洲幸运5开奖号码历史查询:diminishing balance and ballooning.

The written-down value of an amortized asset is important because it hel🃏ps the company to keep tabs on them. When an asset is amortized to zero, it can be taken off the books or may need to be renewed.

Depreciation Methods

Written-down value can be calculated by a method of depreciation that is sometimes called the diminishing balance method. This accounting technique reduces the value of an asset by a set percentage each year. Various other depreciation techniques also exist in accounting and are used to 澳洲幸运5开奖号码历史查询:capitalize the expenses of different types of assets.

One example is 澳洲幸运5开奖号码历史查询:straight line depreciation, which deducts the same cost every year based on dividing the difference between the asset's cost and its expected 澳洲幸运5开奖号码历史查询:salvage value by the number of years it is expec💮te🌠d to be used.

The written-down value of a depreciated asset is important because it is included in the comprehensive value of a company’s total assets. Depreciated assets typically start on the b𓃲ooks at their purchased price and are often sold before they are depreciated to zero.

The depreci꧅ated value of an asset is also important in helping to determine the selling price of the asset. When selling the asset, the book valu💞e is used to help determine the minimum value for which it will be sold.

澳洲幸运5开奖号码历史查询:Real assets typically sell for a price range within their book value and the highest 澳洲幸运5开奖号码历史查询:fair market value. If a gain occurs from the sale of an asset, it will be taxable in most cases. The 澳洲幸运5开奖号码历史查询:taxable gain on📖 a sale is often determined by comparing the sales from the item to i🦩ts written-down value.