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Processes 71

simultaneously. This practice is called parallel depreciation or parallel valu-
ation of assets, and it is used to support the practice of parallel accounting
discussed earlier in this chapter.
These different calculations are maintained in different depreciation
areas. Common depreciation areas vary across countries. In the United
States, the common areas are book depreciation, cost accounting deprecia-
tion, and tax or legal depreciation. Book depreciation is used to prepare fi nan-
cial statements for shareholders and to meet regulatory requirements. Cost
accounting depreciation is used to allocate the cost of using the asset to a
cost center. For example, the depreciation associated with a machine used in
a production facility is allocated to the production cost center. Tax deprecia-
tion is used to fi le federal and state income tax returns.

Demo 3.9: Depreciate an asset

Retirement
After an asset has completed its useful life, it is disposed of, or retired. Asset
retirement may or may not generate revenue. If an asset does not generate rev-
enue, then it is scrapped. An asset can be sold to an external entity. The com-
pany may choose to utilize a fulfi llment process similar to the one described in
Chapter 5 to dispose its assets.

INTEGRATION WITH OTHER PROCESSES
Because fi nancial accounting is concerned with recording the fi nancial conse-
quences of process execution, it is tightly integrated with all of the processes in
an organization, as illustrated in Figure 3-22. Numerous steps in the different

Figure 3-22: Integration of fi nancial accounting with other processes

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