[Verse 1] When companies buy assets that will last for years They can't expense it all at once, that much is clear A machine, a building, or equipment so fine Must spread its cost out over its useful time [Chorus] Depreciation allocation, spreading costs with calculation Straight line steady, accelerated ready, units match production Three methods true, each one will do, but impacts are different Straight line steady, accelerated ready, units match production [Verse 2] Straight line method is the simplest way to go Take the cost minus salvage, divide by years you know Same amount each period, steady as can be Twenty thousand minus two, divided by nine equals steady fee [Chorus] Depreciation allocation, spreading costs with calculation Straight line steady, accelerated ready, units match production Three methods true, each one will do, but impacts are different Straight line steady, accelerated ready, units match production [Verse 3] Accelerated methods frontload all the expense Double declining balance makes the most sense Take twice the straight line rate, multiply book value Higher costs early on, lower costs when through [Verse 4] Units of production matches usage to the cost Divide by total output, no efficiency is lost High production years mean higher depreciation Low production years mean cost conservation [Chorus] Depreciation allocation, spreading costs with calculation Straight line steady, accelerated ready, units match production Three methods true, each one will do, but impacts are different Straight line steady, accelerated ready, units match production [Bridge] Financial statements show the impact clear Higher depreciation means less income here But cash flow stays the same no matter what It's just allocation, timing is the cut [Chorus] Depreciation allocation, spreading costs with calculation Straight line steady, accelerated ready, units match production Three methods true, each one will do, but impacts are different Straight line steady, accelerated ready, units match production [Outro] Choose the method that matches best How your asset passes every test Depreciation tells the story true Of how assets create value through and through
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