I often am asked this question by bookkeepers and business owners alike. The Internal Revenue Service defines a fixed asset as property used in a trade or business or in an income producing activity that wears out or becomes obsolete and it must have a determinable useful life substantially beyond the tax year. This [...]
Archive of posts tagged Depreciation
Land Improvements
These are assets that have limited lives including walkways, driveways, fences and any other improvements to the land mass. They are subject to depreciation and should be recorded in a separate account than the purchase cost of the land.
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MACRS
MACRS is a depreciation type as defined by the Internal Revenue Service where the entire acquisition cost is depreciated with no residual value. This leaves the book value of an asset with an zero balance after being fully depreciated. Under MACRS the IRS, not your company, determines the asset’s life by assigning all [...]
Tracking Fixed Assets
QuickBooks has a tool that allows you to easily track fixed assets. Using the Fixed Asset List you can add new items, track disposed fixed assets and produce fixed asset reports by entering asset names, serial numbers, acquisition and disposal dates. Choose the Fixed Asset Item list from the Lists menu in [...]
Depreciation
An asset decreases in value over a period of time and depreciation is defined as the dollar amount of this decrease in value. Assets are assigned a useful life according to accounting and IRS regulations. Depreciation is applied periodically to the value of the asset over this predetermined useful life leaving the value [...]
Determining the Cost of an Asset
I am often asked by business owners why the market value of an asset is not listed on their balance sheet. This is because in the bookkeeping and accounting professions we are traditionally reluctant to accept market value as the basis of asset measurement. Although assets such as cash or accounts
receivable are usually measured by [...]
