In general usage, depreciation is a term used to describe the decline in an asset's value due to multiple causes, both internal and external to the asset. In accounting, it refers to the procedure used to represent the decline in an asset's value due to its usage in the business's revenue-producing activities on the accounts. Said procedure deducts a portion of the asset's value in each period of its usage, until its usefulness is at an end and its depreciable value exhausted. Office window blinds tend to be depreciated as a component of a larger asset, most often the building of the window to which they are attached.
One of the most important rules in accounting is the matching principle, which requires expenses to be recorded in the same time periods as the revenues that their occurrence helped produce. Since assets lose value through their usage in revenue-producing activities, these losses must be recorded as per-period depreciation expense in each period of the assets' usage.
Book Value, Useful Lifespan, and Residual Value Upon Disposal
Most methods used to calculate per-period depreciation expense require the asset's book value, useful lifespan, and residual value upon disposal to be known. Book value is the asset's initial purchase price and most often an accurate assessment of its fair market value. Useful lifespan is the length of time that the asset is expected to remain useful in its intended purpose while residual value upon disposal is the sum that the asset can expect to be sold for as scrap once it becomes useless. Useful lifespan determines how long the asset is depreciated for, while residual value is subtracted from book value to produce the asset's depreciable value.
Depreciation of Window Blinds
Window blinds are likely considered of too little importance to be listed as an asset on their own. Instead, their values are likely recorded as part of a larger and more comprehensive asset, most probably that of the building itself. In this case, window blinds would have their values depreciated along with all other components of the building when it is depreciated. Said process would last as long as the building's useful lifespan, which can differ wildly depending on what sort of building it is.
Useful Lifespan of Window Blinds
Despite their being largely inconsequential, window blinds can have some small impact on the depreciation of the asset to which they are attached. Both the useful lifespan and book values of assets can increase with upgrades and improvements that produce benefits across multiple time periods. For example, it is possible for all of a building's window blinds to be replaced, and for this replacement to benefit the business across multiple time periods; in which case the expenditure made for the replacement is called a capital expenditure, and its value is added to that of the base asset.
Alan Li started writing in 2008 and has seen his work published in newsletters written for the Cecil Street Community Centre in Toronto. He is a graduate of the finance program at the University of Toronto with a Bachelor of Commerce and has additional accreditation from the Canadian Securities Institute.