Methods of computing depreciation, and the periods over which assets are depreciated, may vary between asset types within the same business and may vary for tax purposes. Depreciation expense generally begins when the asset is placed in service. There are several standard methods of computing depreciation expense, including fixed percentage, straight line, and declining balance methods. The former affects the balance sheet of a business or entity, and the latter affects the net income that they report. Businesses depreciate long-term assets for both tax and accounting purposes. For example, a depreciation expense of per year for five years may be recognized for an asset costing
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