Depre123 Resources for Help with Depreciation Answers

Depre123 is a cloud based application to manage fixed assets and generate a variety of depreciation reports on any desktop or mobile device. Get all of your depreciation answers based on just 3 key values (cost, date, asset class) and then utilize the open design to add all necessary fixed asset detail.

Where do you turn when you have a question about fixed assets or depreciation? On the Depre123 Resources tab there are many answers:

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The Resources tab provides useful links to:

  • Latest information on Tax Regulations
  • Current Accounting News stories on our blog depreciationguru.com
  • Depre123 Overview will help to get an understanding of basic features
  • White paper “Calculating Depreciation in the Cloud”
  • Depre123 User’s Guide
  • Getting Started Guide for first time users
  • Email & phone number for technical support
  • A link for each individual state’s rules regarding depreciation

By linking to our active blog on fixed assets and depreciation, you will always have access to the most current news and information. We monitor top accounting sites, magazines and other news sources to keep up with any related content so you don’t have to.

The documentation links should be your first stop for any questions on the Depre123 application. If you can’t find the answer here then reach out to our support team by email or phone. For anyone that needs to calculate depreciation for more than one state, you will greatly appreciate the links to get the specific rules for every state.

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

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U.S. Tax Code Costs $409 Billion

Much has been written about the size and complexity of the U.S. Tax Code. However, one glaring omission in all this chatter has been what is the cost to the economy to navigate these intricacies. Well, Scott Hodge has dug into the data and given us the answer via a post from the Tax Foundation.

U.S. Tax Code Costs $Over the last century, the federal tax code has expanded dramatically in size and scope. In 1955, the Internal Revenue Code stood at 409,000 words. Since then, it has grown to a total of 2.4 million words: almost six times as long as it was in 1955 and almost twice as long as in 1985.

However, the tax statutes passed by Congress are only the tip of the iceberg when it comes to tax complexity. There are roughly 7.7 million words of tax regulations, promulgated by the IRS over the last century, which clarify how the U.S. tax statutes work in practice. On top of that, there are almost 60,000 pages of tax-related case law, which are indispensable for accountants and tax lawyers trying to figure out how much their clients actually owe.

Tax complexity creates real costs for American households and businesses, starting with just the time it takes us to comply with the tax code.

According to the latest estimates from the Office of Information and Regulatory Affairs, Americans will spend more than 8.9 billion hours complying with IRS tax filing requirements in 2016. This is equal to nearly 4.3 million full-time workers doing nothing but tax return paperwork.

The time it takes to comply with the tax code imposes a real cost on the economy. Individuals and businesses need to devote resources to complying with the tax code instead of doing other productive activities. For example, a business owner who needs to file a complex tax return each year may hire an accountant or tax lawyer to do it. This tax professional may cost $70,000 a year or more. This is $70,000 that this business owner cannot devote to purchasing equipment or hiring workers. Economists refer to this as an opportunity cost, and it results in lost productivity.

Put in dollar terms, the 8.9 billion hours needed to comply with the tax code computes to $409 billion each year in lost productivity, or greater than the gross product of 36 states.

Read The Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Proposal From Sen. Wyden Looks to Simplify Depreciation Rules

Recently Senator Ron Wyden, D-Ore., who is the ranking Democrat on the Senate Finance Committee, has proposed to simplify the complicated capital depreciation rules for businesses. He offered a discussion draft of legislation to simplify one of the most complex areas of the tax code—capital depreciation rules—making it easier for businesses to invest in everything from trucks to computers, as his committee held a hearing on business tax reform. Michael Cohn, in an article on Accounting Today has detailed the major points of this proposal.

Proposal From Sen. WydenCurrently companies have to navigate the high costs and complexity imposed by the tax code every time they want to buy or sell a piece of equipment. Small businesses are at a disadvantage as they invest in basic items to run their companies when needed, rather than when it makes the most sense from a tax perspective. In addition, the Congressional Budget Office has found that the existing rules, written in the 1980s, create bias between different industries and hit high-tech companies the hardest.

To address this complexity, the Wyden proposal would condense the 100 existing depreciation rules into six “pools,” while maintaining accelerated depreciation. The proposal would simplify the amount of math a business has to do, eliminating unnecessary rules requiring three complex calculations per asset every year. It would also significantly simplify and expand tax-free reinvestment rules to help business owners focus on growing their operations.

The draft would also modernize the tax rules to remove existing barriers for investment in high-tech industries and infrastructure.

Read the Full Article Here:

For a different take on Senator Wyden’s proposal, and how it doesn’t go far enough, read this post from Americans for Tax Reform.

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Calculating Amortization and Depreciation Using Straight-Line Method

As per The Motley Fool, amortization and depreciation are “non-cash expenses on a company’s income statement. Depreciation represents the cost of capital assets on the balance sheet being used over time, and amortization is the similar cost of using intangible assets like goodwill over time.” Below they show us an example of how to calculate amortization and depreciation using straight-line method.

The accounting of amortization and depreciation is essentially the same, so for our example we can simplify the process and just consider a simple equipment purchase.

Calculating Amortization and DepreciationWhen a company buys a capital asset like a piece of equipment, it reports that asset on its balance sheet at its purchase price. Let’s say that our company buys a piece of equipment for $15,000.

Over the next year though, the company will begin to recognize a depreciation expense for the equipment, representing its gradual obsolescence, loss of value from use, and increased age.

The first step in this calculation is determining which depreciation method will be used to determine the proper expense amount. For simplicity, we’ll use the straight line method in this example. First the company must determine the value of the asset at the end of its useful life. This salvage value, or residual value, is subtracted from the purchase price and then divided by the number of years in the asset’s useful life. In the case of our equipment, the company expects a useful life of seven years at which time the equipment will be worth $4,500, its residual value.

Completing the calculation, the purchase price subtract the residual value is $10,500 divided by seven years of useful life gives us an annual depreciation expense of $1,500.

Each of the next seven years, the company will recognize annual depreciation expense of $1,500 on the income statement. At the same time, the book value of the equipment will reduce on the balance sheet by that same $1,500 per year. The reduction in book value is recorded via an account called accumulated depreciation.

Each year, the income statement is hit with a $1,500 depreciation expenses. That expense is offset on the balance sheet by the increase in accumulated depreciation which reduces the equipment’s net book value. As the name of the “straight-line” method implies, this process is repeated in the same amounts every year.

If you want to take the guess work out of amortization and depreciation calculations, regardless of the method, Let the Depre123 depreciation calculator do the job for you. Just enter 3 simple values (Cost, Date, Class) and get all the answers. The calculator is a great way to view the depreciation results for a handful of assets. If you manage hundreds or thousands of fixed asset records then a trial of the full Depre123 application can demonstrate how to simplify the entire process of fixed asset management.

Read the Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Sarbanes-Oxley (Sox) – Effective or Not?

Sox - Effective or NotIn 2002 the Sarbanes-Oxley Act (SOX) was enacted following a series of failures involving various functions designed to protect the interests of the investing public. At the time, it was considered to be the most far-reaching legislation affecting public corporations and their independent auditors since the 1930s.  But the question is, has SOX been effective? We turn to Curtis C. Verschoor and an article on Accounting Web for the answer.
SOX is widely credited for strengthening at least two major areas of investor protection: 
  1. CEO and CFO responsibility and accountability for all financial disclosures and related controls
  2. increased professionalism and engagement on the part of corporate audit committees
Yet some continue to question its overall value, citing, as an example, its failure to prevent the situations that led to the financial crisis of 2008.
 
Section 404
 
One of the most controversial aspects of SOX Act is Section 404, which requires company management to provide assertions of effective internal control over financial reporting and for the company’s independent audit firm to attest to those assertions.
 
Congress has been repeatedly pressured to ease this requirement, which it did with the Jumpstart Our Business Startups Act (JOBS Act), passed by Congress and signed by President Obama April 5, 2012. The JOBS Act contained a provision that eliminated the SOX Section 404 requirements for organizations that meet the definition of an emerging growth company.
 
Aside from requiring management’s assertions and the auditor’s attestation, SOX Section 404 also requires public companies to disclose whether or not they have adopted a code of ethics applicable to their senior financial officers.  All these requirements have significantly elevated the visibility of ethics and made a strong ethical culture a best practice for organizations of all sizes and types.
 
Audit Firm Performance
 
When evaluating the overall effectiveness of SOX, a vital consideration to make is whether the performance of independent auditors has improved over the last ten years.  Whether the revised oversight structure adequately regulates public company auditors appears to be an open question even after so many years.
 
Since auditing became a distinct occupation many hundreds of years ago, auditors have functioned largely as self-regulating professionals. Prior to SOX, important decisions regulating the profession were made largely or exclusively by the auditing industry, its firms, and auditors themselves. 
 
When SOX was enacted, the practice of public accounting was divided into audits of publicly held companies and all other entities. SOX established the Public Company Accounting Oversight Board (PCAOB). The PCAOB was given the mission to set and enforce practice standards for a new class of firms “registered” to audit publicly held companies. Standards for not-for-profit and governmental entities continue to be set by the industry itself.
 
An annual speech by the PCAOB chairman has been the only public evaluation of the quality of performance of audit firms. These reports have expressed only general comments, not comprehensive statistics. 
 
The general requirement in SOX that all findings resulting from PCAOB inspections be held confidential hinders any analysis of perhaps the key measure of audit quality: audit failure. Public reports of annual inspections of specific audit firms contain no details of findings on individual clients.
  
An analysis of firm performance reported in PCAOB firm inspections appearing in Between the Numbers showed a 20 percent rate of audit failure at E&Y for 2010, more than double the rate in the 2009 inspections. 
 
SOX Enforcement
 
To be fair, a great deal of the effectiveness of SOX depends on the vigor to which it’s enforced. Questions remain as to whether the SEC’s and Department of Justices’s enforcement of SOX has been sufficient. A July 30 article in The Wall Street Journal notes that SOX’s “biggest hammer – the threat of jail time for corporate executives who knowingly certify inaccurate financial reports – is going largely unused.”
 
Although SOX has been successful in increasing corporate focus on a strong ethical culture in publicly owned companies, there’s room for improvement in audit firm performance as well as the PCAOB’s process for assessing and reporting on it.

Read The Full Story Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.