How can I include depreciation in profit and loss statement?

In order to include depreciation in a profit and loss statement, it is necessary to know the costs of the assets or assets and have an idea of ​​their expected lifetime. The cost of each asset is then divided between the years they are expected to be used. The amount for each year is then included in the profit statement and losses for the expected years of use. The first dictates that the value of the asset should be reported as a price at the time of purchase, rather than the replacement costs at the end of the depreciation period or the current market value of the asset at any moment in this period. The principle corresponding is simply the process of distributing the cost of the asset to match the annual profits. This is a condition where expenditure is charged during a period when no payment is made. The method is best used for disposable or extremely occasional expenses such as equipment, technology and vehicles. The estimated lifetime of the asset does not necessarily correspond to the actual period used by the item.

In accounting depreciation in profit and loss statement, the goal is to create an accurate picture of the overall financial situation of the organization. This differs from the company's cash flow that shows the exact picture of the state, but not the performance. The financial situation provides a picture of an organization that is suitable for investors' education in terms of the overall status of the company in the long run, while monitoring the basic cash flow is an important aspect of maintaining accurate records in the short term. This is mainly because it proves that there is sufficient reserve to pay immediate expenditure.

Recrecation in profit and loss statement allows the organization to compare and the asset provides the organization its costs. The main reasons for the inclusion of depreciation in the profit and loss statement are taxes and overall annual accounting. By using depreciation, the organization can expand tax liability for asset. Can also provide a more accurate pictureon the performance of the company. This is because all the cost of the asset is charged in one year, costs can create a look that the company has not done well. If these costs are evenly distributed during the life of the asset, it may be easier to measure performance over the years.