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Chapter 17. Managing Assets > Calculating Depreciation

Calculating Depreciation

The accounting profession, in conjunction with the IRS, has established many complicated rules for calculating depreciation expense—rules certain to confuse even the most savvy businessperson. This section explains some of the basics.

Even though the process of calculating depreciation is designed to spread the cost of a fixed asset over the useful life of the asset, you don’t need to guess about the useful life of your assets. The IRS has already decided what the useful life is for most assets, and you are expected to use these standard lives when determining your depreciation expense. The following is a list of several common asset types and the standard lives assigned to those types, courtesy of the IRS:


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