Fixed assets are your more permanent assets of your business. They are generally not for sale to your customers. When calculating depreciation for your assets, the actual cost you paid for the asset is what you will determine your depreciation for each year. You can also depreciate used assets the same way as new assets. In addition, assets that you owned before you started your business can be depreciated, too. You will use the actual cost you paid for the asset as the cost you figure your depreciation for the asset, in this case.
Depreciating your assets are either depreciated for 5 or 7 years, depending upon what class of asset they are. Usually, cars, trucks, computer equipment, copiers are depreciated for 5 years. Machinery, equipment and office furniture is depreciated for 7 years.
You may also choose to depreciated your assets in different ways, by a few different methods. The straight line method depreciates the same amount over the period of years the asset is. You can also depreciate it using the double declining method which depreciates the asset using double the straight line rate, or by units of activity method whereby you determine how many units are used, cycles of use, or miles driven per period.
Copyright Jeanine Pfeiffer