Depreciation expenditures can be very useful for your business as it allow you to keep your business in A1 shape as long as income keeps you in a viable financial situation. It can be calculated using several depreciation methods and if managed properly, it will allow you to keep the professional look your company has always deserved.

The use of depreciation to capital expenditure is mostly to allow the business to help generate a long term benefit and to allow assets to be utilised to the full extent of their useful fife. Capital expenditure is described as an expenditure generating a long term benefits for the entity. It can usually be seen when purchasing production items and is favorable to cost incurred to bring the assets for their intended use. Example of capital expenditure includes the purchase price of a computer, freight and installation of a new computer, costs f upgrading a computer, costs of building an extension to a building and extension of a factory to name a few.

Depreciation expenses also allow the business owner to weigh different options and take other direction for their enterprise. Calculation method of depreciation will give the opportunity to creatively think of other avenues your business could wander into if there is a chance to make a good profit. This opportunity is created by the double entry of capital expenditures which is a non-concurrent asset as the debit and credit should be cashed into an account. They should not be written as an expense in the period it has incurred, but should be an expense for a number of subsequent chronological periods.

As the objective of charging depreciation is further defined with a matching concept, the expense recognized in each accounting period has to be match with the corresponding revenue of benefits they generate during the same period. They should not be recognised as expenditure during the period of acquisition as it is to be calculated over its useful life value.

Generating a short term profit only, Revenue expenditures are usually spent on a day to day basis as the spending operation should be consumed in the current period. Example of revenue expenditures includes money spent to rent the location your business is in, your employees salaries, the expenses you pay for your courier services.  The revenue expenditure should be written off in the same period they have incurred.

Helping you in the adjustment of your actual value, depreciation expenditures can be very useful to restock on equipment utilized for the production of goods while your business is rolling. Entangled with your capital expenditures, which allow your business to generate a long term profit, it provide your business with long term goals that can be achievable mainly because you have a proficient money turn over system to allow you to spend as the need of your company may be. Daily operations are covered by the revenue expenditures you generates and are being absorbed by the overall business.