A horse trailer used in a business can be depreciated for federal income tax purposes. Depreciation is an accounting concept that businesses use to spread the cost of a piece of property over a period of time. The purpose is to allow businesses to take an annual deduction for the wear and ...
While this may seem obvious, there are certain scenarios where the lines can be blurred, like when a business owner uses their personal vehicle for work purposes. In this case, only the portion used for business reasons can be depreciated. In any case, the IRS lays out a list of ...
What kind of accounting treatment will an asset that has depreciated fully but that is still used in a business be subjected to? On which financial statement(s) would the Retained Earnings account appear? What is the effect on the income statement when the allowance for uncollectible accounts is...
In which category is dividend revenue on the income statement? How would a contingent loss be reported in the income statement? What is depreciation, and which assets are depreciated? What is the difference between paid-in capital and retained earnings?
Can a fully depreciated asset be revalued? What are the accounting entries for a fully depreciated car? What is the accounting treatment for an asset that is fully depreciated, but continues to be used in a business? What is a plant asset? What is a contra asset account? Related ...
Let’s assume that equipment used in a business has a cost of $500,000 and is expected to be used for 10 years. If the company assumes no salvage value at the end of the 10 years, the annual depreciation expense recorded in the general ledger accounts and reported on the financial stat...
Depreciation of some fixed assets can be done on an accelerated basis. Merriam-Webster provides some accelerate synonyms that include "quickened" and "hastened." A larger portion of the asset's value is expensed in the early years of the asset's life. Vehicles are typically depreciated on an ...
Accumulated depreciation is a running total of depreciation expense for an asset that's recorded on thebalance sheet. An asset's original value is adjusted during eachfiscal yearto reflect a current, depreciated value. The machine in our example above that was purchased for $50...
Land is a fixed asset that cannot be depreciated.1 Acquisition and Disposal The acquisition or disposal of a fixed asset is recorded on a company's cash flow statement under thecash flow from investing activities. The purchase of fixed assets represents a cash outflow to the company while a ...
ordinary income rate as long asstraight-linedepreciation is used over the life of the property. Any accelerated depreciation previously taken is taxed at the ordinary income tax rate during recapture.However, the IRS has mandated all post-1986 real estate be depreciated using the straight-line ...