Depreciation

[TrueTears]

Is depreciation a selling expense or an administrative expense?

Also when doing a question that involved preparing a selling/administrative expense budget, a sentence reads "...rental and other office expenses are $1 million per annum, including depreciation of $200,000" (The budget is split quarterly in a year).

Do I say that there is $250,000 of rental and other office expenses per quarter and also $50,000 of depreciation per quarter.

OR

Does the sentence mean that the depreciation cost is already included in the $1 million per annum of rental and other office expenses, so I only have to state that there is $250,000 of rental and other office expenses per quarter.

Thanks

[TrueTears]

Also I don't want to start a new thread but, are dividends and "capital expenditure" financing expenses? Is this why they are not included in the selling/administrative budgets?

Oh and also what are "capital expenditures"? I've never heard of this term before.

[Twenty10]

Is depreciation a selling expense or an administrative expense?

Thanks

Depreciation could be an administrative expense, but it can also be a selling expense, and a part of the cost of manufacturer’s products.

Where depreciation is reported depends on the assets being depreciated. For example, the depreciation on the building and furnishings of a company’s central administrative staff is considered an administrative expense. The depreciation on the sales staff’s automobiles is considered part of the company’s selling expenses. The depreciation on a manufacturer’s factory and production equipment will be included in the overhead cost of the product. When a manufacturer’s products are sold, some of the depreciation will be included in the cost of goods sold. When some of the manufactured products are held in inventory, some of the depreciation associated with the manufacturing process will be included in the cost of the inventory.

As you can see, depreciation is often part of many functions within a company. The company’s depreciation should be assigned to each of the areas where the assets are utilized.

Source: http://blog.accountingcoach.com/depreciation-expense/

[TrueTears]

Thanks Twenty10, that helped alot

[TrueTears]

bump

[ReVeL]

Also I don't want to start a new thread but, are dividends and "capital expenditure" financing expenses? Is this why they are not included in the selling/administrative budgets?

Oh and also what are "capital expenditures"? I've never heard of this term before.

Dividends are not expenses, which is why they are not included in any expense budgets. They are a distribution of a companies earnings to its shareholders, and they do not affect net profit.

Capital expenditure involves either the purchasing of non-current assets, or adding value to existing non-current assets.