Accounting for property deprecation.

Keywords: Accounting for property deprecation.

Bob bought a Ford on Jan. 12 2016 for 22000 USD. He made the accounting entries:

So the first trial balance as at Jan.12 2016 is:

He should use the MACRS method for its deprecation according to IRS Publication 946. This is a listed property, that is used 100% for business purposes, so he elected the GDS (General Depreciation System). This is a 5-­year property. He elected the 200% declining balance method (DL). He should use the half-year convention (HY), so he uses the Table A-1. According to this table the deprecation is 20% for the first year, i.e. 4400 USD is the deducting Bob's 2016 Income Tax. So on 31 December 2016 Bob will transfer 4400 USD from asset account Property into income (business) expense account 5150 Expenses.Property Deprecation:

* You should set the current operating month in the "Accounting settings". You also should better set the operating day in the "User preferences" to make automatically the date of a new document.