Final answer:
Depreciation is often recorded using the half-year convention, wherein a half-year's depreciation is accounted for in the year of acquisition and disposal, simplifying the accounting process.
Step-by-step explanation:
Depreciation is commonly calculated on the assumption that a half-year's depreciation is recognized in both the period of acquisition and the period of disposal of an asset. This approach is often referred to as the half-year convention. Under this method, regardless of when the asset is bought or sold during the fiscal year, it is treated as though it was in service for half of the year for depreciation purposes. This simplifies the calculations and provides a standardized way of recognizing the expense.
Applying this concept to a real-world scenario, if a company purchases a piece of equipment in March and sells it in November of the same year, the company will claim half a year's worth of depreciation expense in both the year of acquisition and disposal. This implies that, for the fiscal year in which the asset is acquired and disposed of, the depreciation expense recognized will only be for half the year, not the full duration the asset was in use.