What Information Is Needed to Determine Depreciation?

Question: What Information Is Needed to Determine Depreciation?

Answer:

What Information Must I Have to Calculate Depreciation?
You must identify several items to be sure your property is correctly depreciated, including:

• The depreciation method used on this property (straight line, double declining balance, sum of the years' digits, or other)
  
• The class life of the asset (how long this asset typically can be depreciated)
  
• Whether the property is "listed property" (computer, cell phone or other devices, which are depreciated in a special way)
  
• Whether you want to expense any portion of the asset, instead of depreciating it
  
• Whether you qualify for any "bonus" first year depreciation.

What Do I Need To Provide My Accountant In Order to Depreciate Property?
In order to determine depreciation on your business assets, your accountant or CPA will need to know:

• The date the asset was "placed in service" or first used in your business
  
• The cost basis of that asset, including purchase price, costs for shipping and setup and installation.

For every long-term asset in your business, you must have a record showing when you purchased it, when you started using it, purchase price and other purchase costs, and when you sold the asset. Keeping track of depreciation can help you correctly determine depreciation to reduce your tax liability, so it is important to keep track of these records.

Back to All About Depreciation