Small Business: Categorizing depreciating expenses

Hello small business edition users,

Record keeping issue: How do you all categorize expenses that are
*depreciable*? Do you create your own category(ies) under "Other business
expense?" The reason I ask is because you don't necessarily want the full
value of depreciated assets to show up in something like the profit and loss
report. i.e. you don't really want your $3000 computer lumped in with this
year's "Office expenses" since you don't get to deduct the whole thing, right?

I was wondering if there are any clever ways other folks out there
categorize these kinds of expenses to keep their business reports clear.

Thanks,

--
-Cal

Dick
Sat Apr 15 16:16:59 CDT 2006

Just a friendly advisory: next to none of them show up here to help. You may
not get an answer. The rest of us would like to help. But we don't use the
*Business* editions.

"Cal in WA" <CalinWA@discussions.microsoft.com> wrote in message
news:4E8F448A-A6D8-4A7E-B70E-24BECA64A89E@microsoft.com...
> Hello small business edition users,

Patrick
Mon Apr 24 10:08:02 CDT 2006

I am a small business user, and I would like to help. However, I'm wondering
the same thing.

"Cal in WA" wrote:

> Hello small business edition users,
>
> Record keeping issue: How do you all categorize expenses that are
> *depreciable*? Do you create your own category(ies) under "Other business
> expense?" The reason I ask is because you don't necessarily want the full
> value of depreciated assets to show up in something like the profit and loss
> report. i.e. you don't really want your $3000 computer lumped in with this
> year's "Office expenses" since you don't get to deduct the whole thing, right?
>
> I was wondering if there are any clever ways other folks out there
> categorize these kinds of expenses to keep their business reports clear.
>
> Thanks,
>
> --
> -Cal

Chris
Mon Apr 24 19:54:21 CDT 2006

"Cal in WA" <CalinWA@discussions.microsoft.com> wrote in message
news:4E8F448A-A6D8-4A7E-B70E-24BECA64A89E@microsoft.com...
> Hello small business edition users,
>
> Record keeping issue: How do you all categorize expenses that are
> *depreciable*?

I don't use SBE, but depreciation expenses generally are recorded in a
'negative' asset account, called a contra-account. The account can be named
something like the asset it affects, like "Truck" vs."Truck - Accumulated
Depreciation". Expenses are entered in the contra-account as decrease in
the account balance, categorized as depreciation. The annual depreciation
affects the income statement.

The book value of the truck is never changed until it's disposed of. At
that time the accumulated depreciation is zeroed at as part of the
transaction, with the net of the transaction going to income or expense.

You may want to simplify that with a single "Accumulated Depreciation"
account, and use categories to associate the depreciation transaction with
the particular asset being depreciated. That will make the balance sheet
simpler overall, but less simple to see the depreciated value of the
assets, at a glance.
--
Chris Cowles
Gainesville, FL