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Amount due from customers, why do we include depreciation of a plant when calculating Receivables?
Don’t think of it as depreciation – think of it as part of “Costs to date” – it’s the value of the plant used up on the contract so far.
If you follow my workings in the construction contract lecture, working W2 is Costs to date + attributable profits – amounts invoiced.
The value of the plant used up to date is surely part of costs to date and that value which has been used up is classically termed “depreciation”
OK?
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