Rounding errors have traditionally been an issue found when using depreciation software. The problem comes from the basic division of asset cost over a number of periods. For example, take a fixed asset with a cost of $1.00 spread over 3 months. This would result in $.33 per period, but when multiplied by 3 periods [...]
Asset Acquisition Reporting will be the topic of our fourth depreciation reporting post.
This report displays all of the assets acquired between the selected period begin and end dates. The selected periods can be:
A single month
3 months or a quarter
6 months or half the year
12 months or the entire year
Any number of months to show year-to-date
When [...]
IAS 16: Property, Plant & Equipment:
One of the hottest topics in the US accounting world is the transition to IFRS, which stands for International Financial Reporting Standards. IFRS and IAS, International Accounting Standards, provide the detail behind the conceptual framework of the International Accounting Standards Board (IASB). To clarify, the IASB is the [...]
This post will begin a series of posts to help create an understanding of fixed asset depreciation reporting. Many companies use a variety of different software solutions capable of generating numerous reports. Such reports include roll forward reports, monthly depreciation expense reports, asset acquisition reports, and more. Here you will find the description of a [...]
Continuing with the segment on Bonus Depreciation, this post will address depreciation rules for property in the New York Liberty Zone. A little over eight years ago, the atrocious events of September 11 left our country devastated physically, emotionally, and economically. With regards to the economic turmoil that ensued, particularly in the area of the [...]
There are three critical dates for each individual fixed asset. These dates establish when the asset was acquired, placed in service, and the start of depreciation. These three dates are listed below:
Acquisition Date - the date the asset was purchased.
Service Date - IRS rules define when an asset is placed in service and depreciation of [...]
Bonus Depreciation has become a hot topic and has seen many changes over the last decade. There are also continuing debates as to how effective it really is. However, we will attempt to clarify the issues of bonus depreciation by covering all the aspects and history. Continuing from the initial post on Bonus Depreciation and [...]
With all of the rules and regulations governing depreciation, and the various methods of depreciation, one may find it difficult to actually calculate depreciation. This post will hopefully serve as a basic comprehensive guide to calculating depreciation under different circumstances. The following examples are based upon use of half year averaging convention.
Straight-Line Method:
Annual Depreciation [...]
There are two basic different methods of depreciation to choose from when depreciating an asset. These methods include Straight-line, and Declining Balance at either 200% or 150%. Choosing among these methods depends on how a company wishes to receive depreciation expenses.
The Straight-Line method is generally the most commonly used method due to its simplicity [...]
Below is a general overview of the history of depreciation through 1986. Included are major changes or additions to rules and regulations concerning the ways in which depreciation is determined and allowed.
1934: Up to this point the estimation of the useful lives of depreciable assets was not very regulated. Then, during the Great Depression, the [...]