When do you depreciate an asset?
submitted by n8_smo

Vic

It has to be a physical item (not software). It needs to cost more than $300 and last longer than a year.

Dr. Dave

The item cannot be inventory for selling, but an asset for company use.

Arnold

If an asset wears out, i.e. trucks, buildings, tools, it is subject to depreciation. Land, on the other hand, does not wear out, so it cannot be depreciated.

Iggi

Depreciating an asset isn't necessary, but it's better for the company. Your books will reflect a more accurate picture of your assets if you use depreciation, which helps with your taxes.

If you buy a work truck for $20k, it won't always be worth $20k. In ten years, it might be work $6k, and you wouldn't want your books to be showing a $20k truck. Without depreciating that asset, your books will overstate the value.