Also known as: depreciation expenses · depreciation
Written by attorneys · grounded in primary & secondary sources — see below
An expense recorded on an income statement that systematically allocates the cost of a tangible asset over its estimated useful life. The allocation reduces reported net income and reflects the asset's declining value on the balance sheet.
Dustin Donovan and Doris Duffy are dissolving their marriage and must equitably divide business assets including heavy machinery. The company's books show annual depreciation expense that has steadily lowered the equipment's carrying value since acquisition. The court must decide whether to use that reduced book value or an independent appraisal when apportioning the property without regard to marital misconduct.
Dominion Capital holds a mortgage on commercial property owned by Dynamic Solutions. After default and foreclosure, the court calculates any deficiency by comparing the debt to the property's fair market value. Dominion Capital's appraisal incorporates current reproduction cost less accumulated depreciation expense to arrive at that value, excluding foreclosure-specific impacts.
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Depreciation expense recorded on business books lowers the carrying value of assets such as equipment. Courts consider this reduced value along with other statutory factors when apportioning property between spouses.
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Yes. Appraisers may use reproduction cost less accumulated depreciation expense as one method to estimate fair market value of real estate. That value is then compared to the debt to compute any deficiency.
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Yes. It is listed among operating expenses and subtracted from revenues to arrive at net income for the period.
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