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Depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company.
Depreciation
The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or decline in value.
Period Cost
Expenses that are not directly tied to the production process and are expensed in the period in which they are incurred.
Manufacturing Company
An enterprise that processes raw materials or semi-finished goods into finished goods through the use of labor, machinery, tools, and chemical or biological processing or formulation.
- Distinguish between period and product costs and understand their impact on financial reporting.
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Learning Objectives
- Distinguish between period and product costs and understand their impact on financial reporting.
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