Depreciation Terms and Methods at Company and Macroeconomic Level in Hungary

Abstract

The term depreciation differs in the System of National Accounts from the accounting. Calculation and presentation of depreciation and amortization can also vary by accounting and tax systems. Our research aims to compare the depreciation terms and requirements of National Accounts with the of the Hungarian Accounting Act, the International Financial Reporting Standards (IFRS) and the Hungarian Corporate Tax Act. The presented accounting depreciation and amortization can vary due to the different recognition and measurement requirements, the applied accounting policy for fixed assets, determination of useful life, residual value and depreciation methods. The Corporate Tax Act uses the same terminology as the Accounting Act but calculates depreciation differently. The detected differences in the terminologies and methods at economic, accounting and taxation level can be derived from the different underlying purposes of the regulations. As a consequence of these the aggregated accounting or tax depreciation of companies does not reflect the economic depreciation.