Abstract
The purpose of this research is to determine the calculation of the depreciation cost allocation for fixed assets and its effect on operating income when using other alternative methods such as the double-declining balance depreciation method. Fixed assets will experience a decrease in economic value due to usage, damage, and obsolescence due to economic factors and technical factors. The method of depreciation of fixed assets that are used must be following the applicable accounting financial accounting standards, including the straight-line depreciation method and the double-declining balance depreciation method. Sources of data used in this study are secondary data types. Secondary data obtained in this study are from the official website of the IDX (Indonesia Stock Exchange) in the form of financial reports and fixed asset data for 2014-2018. The type of data of this research is quantitative, while the data processing method is the straight-line method and the multiple declining balance method. The results of the analysis in this study can be concluded that the method of depreciation of fixed assets used by the company is the straight-line depreciation method because operating income which is influenced by the straight-line depreciation method has a higher result compared to the double-decreasing balance depreciation method.
Highlights
A company is established to obtain optimal returns on its operational activities and to invest to maintain the smooth running of the business in the long term
The purpose of this research is to determine the calculation of the depreciation cost allocation for fixed assets and its effect on operating income when using other alternative methods such as the double-declining balance depreciation method
The results of the analysis in this study can be concluded that the method of depreciation of fixed assets used by the company is the straight-line depreciation method because operating income which is influenced by the straight-line depreciation method has a higher result compared to the double-decreasing balance depreciation method
Summary
A company is established to obtain optimal returns on its operational activities and to invest to maintain the smooth running of the business in the long term. The investment in question is an asset that is used in the normal activities of a company that has an economic age of more than one year [1]. Fixed-asset investment refers to the volume of activities in construction and purchases of fixed assets and related fees, expressed in monetary terms during the reporting period [2]. Every company has fixed assets, both tangible and intangible assets. Fixed assets can be used as a means of support in the company's operational activities because without fixed assets it could be that the business activity will not run well. The operating performance of new economy companies may turn profitable and lead to rapid growth in revenues and profits [3]
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