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Depreciation Reserve

   Also found in: Legal 0.01 sec.
Accumulated Depreciation
The total depreciation on an asset, and not simply the depreciation that is added each year. One may calculate the accumulated depreciation by subtracting the original value of the asset from its current book value or by multiplying the yearly depreciation by the number of years the asset has been held.

depreciation reserve


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Another possible solution is for the trust's governing instrument to provide for a depreciation reserve or allocation of the depreciation deduction.
Just as business owners know it is good business practice to establish depreciation reserves for machinery, so, too, they recognize the necessity of accumulating funds to protect against the loss of management talent.
The trust instrument requires the trustee to build up a depreciation reserve at the rate of $12,500 per year; the building will go to Smith's son, Albert, when the trust terminates at the end of 12 years.
 
 
 
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