Explanation
Depreciation allows businesses to:
- Spread the cost of assets over time
- Match expenses with revenue generation
- Gain potential tax benefits
Common methods include:
- Straight-line depreciation
- Declining balance depreciation
Practical Example of Depreciation
A business buys machinery for £10,000 and depreciates it over five years, recording £2,000 as a depreciation expense each year.
How Bizcap Can Help:
Need to upgrade or replace depreciating assets? Bizcap’s equipment financing options help maintain operational efficiency without draining cash reserves.