Under Generally Accepted Accounting Principles, the original cost of a fixed asset acquisition must be initially recorded. An allowance for depreciation is made, but the cost is not adjusted to current market value – i.e. the amount that would be realized if the asset were sold. This method, known as the historical cost principle, may [...]

Although there are several processes that can be used to calculate depreciation – the straight-line method, the units of production method and two accelerated methods known as declining balance and sum-of-the-year’s-digits – there is only one way to record it. This being said, the frequency of calculating depreciation can differ. Your company may record its [...]

Simply put, gain occurs when the sales price of a fixed asset exceeds the asset’s book value and loss occurs when the fixed asset’s sales price is lower than its book value. Although the concepts seem easy, many people struggle with figuring the gain or loss from the disposition of their assets. Often, organizations run [...]

Under the 2010 Tax Relief Act, bonus depreciation expensing limits were adjusted to the advantage of business owners. Specifically, certain fixed assets that were brought into service on or after September 9 of last year qualify for 100 percent bonus depreciation. This bonus depreciation period will continue until the last day of 2012. Long-production-period property [...]

When your business acquires a new asset, you must assign a depreciation value to write off the initial cost over the item’s lifespan. To qualify for depreciation, you need to use the asset for more than a year to produce income, according to the United States Internal Revenue Service. A business should consider the different [...]