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Depreciation Methods |
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DEPRECIATION METHODS BASICS RELATED TOPICS Entering Depreciation MethodsTo enter a Depreciation Method record, follow these steps:
Data FieldsEnter the following information for each Depreciation record:Name-- Type in a brief name for this depreciation method. This is the text that will appear in clairvoyant fields. Depreciation Calculation MethodsGoldenseal allows you to use several different calculation methods to compute depreciation or amortization.For tax depreciation, use whichever method is required by tax regulations, based on the type of asset and the year it was placed in service. For general depreciation, use whichever method best matches your needs. HINT-- Declining balance methods result in the fastest depreciation. Sum of years is slower, and straight line is slowest. Choose from any of the following depreciation calculation methods: Capitalized-- The item will never be depreciated or amortized. Expensed-- The item will be fully depreciated during the first year. Straight Line-- Depreciation or amortization will be evenly divided over the lifetime of the item. 150% Declining Balance-- This method uses 150% of the straight-line percentage for the first year. The same percentage is then applied to the remaining balance, each succeeding year. 200% Declining Balance-- This method uses twice the straight-line percentage for the first year. The same percentage is then applied to the remaining balance, each succeeding year. NOTE-- This method is sometimes called Double Declining Balance, or DDB. 150% MACRS-- This method is similar to the 150% declining balance method, but it switches to straight line rates when those would be higher than the declining balance rate. 200% MACRS-- This method is similar to the 200% declining balance method, but it switches to straight line rates when those would be higher than the declining balance rate. ACRS-- Accelerated Cost Recover System is used by the IRS for items placed in service between 1980 and 1987. It is based on tables for 3-year, 5-year, 10-year, 15-year, 18-year and 19-year lifetimes. It is not available for other lifetime quantities. Custom-- No percentages will be calculated. Type in depreciation percentages for each year of the lifetime. Sum of Years-- This method uses a complex formula based on the sum of the digits for each year in the lifetime. Depreciation amounts start high, and decline steadily over the lifetime. For all depreciation calculations except capitalized and expensed, the first year's depreciation is adjusted using the first-year convention. First Year ConventionYou can select from several different conventions for handling the first year's deprecation.Choose any of the following: Day-- The first year's depreciation will be adjusted by the number of days between the purchase date and the last day of the year, divided by
the number of days in the year. Current US tax policy uses the mid-month convention for real estate depreciation. Most other items use the half-year convention, although in some cases
the mid-quarter convention may be required. Using DepreciationTo use a depreciation method, open a Real Estate or Equipment Account and enter the depreciation methods that are used for business management and tax purposes.Main Page | Accounts | Lists | Transactions | Menus | Index | Website | User Page |