What is Depreciation?
Definition
Depreciation is the systematic allocation of a fixed asset's cost over its useful life, reflecting the asset's wear and tear, obsolescence, or decline in value.
Explained Simply
South African tax law (Income Tax Act, Section 11(e)) specifies depreciation rates for different asset categories. The two main methods are straight-line (equal annual amounts) and reducing balance (percentage of remaining value). For tax purposes, SARS prescribes rates: computers at 33.3% (3 years), office furniture at 16.67% (6 years), and vehicles at 20% (5 years). Accounting depreciation may differ from tax depreciation, creating deferred tax. Accounter calculates depreciation automatically based on asset details.
Free Tool
Depreciation Calculator
Calculate asset depreciation using straight-line, declining balance or sum-of-years-digits methods.
Related Guide
How-To: Calculate Depreciation
Read guideRelated Terms
Fixed Asset
A fixed asset (also called a non-current or tangible asset) is a long-term physical asset owned by a business that is used in operations and not intended for sale, such as buildings, vehicles, machinery, or equipment.
Amortization
Amortization is the process of spreading the cost of an intangible asset (such as a patent, trademark, or software licence) over its useful life, similar to depreciation for tangible assets.
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