Gaap depreciation tools

In these situations, Plant Accounting looks at comparable guidelines as well as consulting with the vendor the item was purchased from and the department that will be using the piece of equipment. When the accumulated depreciation equals the original cost, no further depreciation is accrued; however, both the balance of first cost and the reserve remain on the books until the item is disposed.

When the item is dismantled, demolished, sold, or otherwise disposed, the cost of the item and accumulated depreciation are removed from the ledger. Within the University, depreciation expense is posted at the company level in SAP. Within DUHS, depreciation expense is posted to either a departmental cost center or a building cost center. Within the Fixed Assets module of SAP, each building in its entirety must belong to only one company. However some buildings are actually shared.

This sharing of space is recorded in the institutional space system often referred to as Web Central. Within SAP, all of the depreciation for a building is charged to the "owning" company. Plant Accounting then uses an SAP allocation process to move the monthly depreciation expense to the appropriate company. Equipment also can only belong to one company in SAP, in the rare situations where a major piece of equipment must be allocated between companies; Plant Accounting uses the above reference process to allocate the depreciation expense each month.

If upon review of the financial records, it appears that depreciation is being charged to the wrong cost center the department should bring this to the attention of Plant Accounting. Category II Same as Cat. Includes assets used in the urban and interurban commercial and contract carrying of passengers by road, except the transportation assets included in classes with the prefix Includes assets used in the commercial and contract carrying of freight by road, except the transportation assets included in classes with the prefix Includes assets used in the commercial and contract carrying of freight and passengers by water except the transportation assets included in classes with the prefix Includes all related land improvements.

Includes assets except helicopters used in commercial and contract carrying of passengers and freight by air. For purposes of section 11 d 2 iv a of the regulations, expenditures for "repair, maintenance, rehabilitation, or improvement" shall consist of direct maintenance expenses irrespective of airworthiness provisions or charges as defined by Civil Aeronautics Board uniform accounts , maintenance burden exclusive of expenses pertaining to maintenance buildings and improvements as defined by Civil Aeronautics Board uniform accounts , and expenditures which are not "excluded additions" as defined in section 1.

Includes each asset described in the description of class This criterion of classification based on binding contract concept is to be applied in the same manner as under the general rules expressed in section 49 b 1 , 4 , 5 and 8 of the Code as in effect prior to its repeal by the Revenue Act of , section c 1 , d , C. Includes assets used in the private, commercial, and contract carrying of petroleum, gas and other products by means of pipes and conveyors. The trunk lines and related storage facilities of integrated petroleum and natural gas producers are included in this class.

Excludes initial clearing and grading land improvements as specified in Rev. Includes the assets identified below and that are used in the provision of commercial and contract telephonic services. Includes assets intended to house central office equipment, as defined in Federal Communications Commission Part 31 Account No. Includes central office switching and related equipment as defined in Federal Communications Commission Part 31 Account No.

Does not include private branch exchange PBX equipment. Includes equipment whose functions are those of a computer or peripheral equipment as defined in section i 2 B of the Code used in its capacity as telephone central office equipment. Includes such station apparatus and connections as teletypewriters, telephones, booths, private exchanges, and comparable equipment as defined in Federal Communications Commission Part 31 Account Nos.

Property described in asset guideline class Includes such assets as pole lines, cable, aerial wire, underground conduits, and comparable equipment, and related land improvements as defined in Federal Communications Commission Part 31 Account Nos.

Includes assets used in radio and television broadcasting, except transmitting towers. Telegraph, Ocean Cable, and Satellite Communications TOCSC includes communications-related assets used to provide domestic and international radio-telegraph, wire-telegraph, ocean-cable, and satellite communications services; also includes related land improvements.

If property described in Classes Comparable equipment does not include cable television equipment used primarily for 1-way communication. Includes assets used in the provision of electric power by generation, modulation, rectification, channelization, control, and distribution. Does not include these assets when they are installed on customers premises. Includes assets such as transmitters and receivers, antenna supporting structures, antennas, transmission lines from equipment to antenna, transmitter cooling systems, and control and amplification equipment.

Does not include cable and long-line systems. Includes assets such as transmission lines, pole lines, ocean cables, buried cable and conduit, repeaters, repeater stations, and other related assets.

Does not include high frequency radio or microwave systems. Includes assets for general control, switching, and monitoring of communications signals including electromechanical switching and channeling apparatus, multiplexing equipment, patching and monitoring facilities, in-house cabling, teleprinter equipment, and associated site improvements.

Includes central office switching computers, interfacing computers, other associated specialized control equipment, and site improvements.

Includes assets such as fixed earth station equipment, antennas, satellite communications equipment, and interface equipment used in satellite communications. Does not include general purpose equipment or equipment used in satellite space segment property.

Includes satellites and equipment used for telemetry, tracking, control, and monitoring when used in satellite communications. Includes assets installed on customer's premises, such as computers, terminal equipment, power generation and distribution systems, private switching center, teleprinters, facsimile equipment, and other associated and related equipment.

Includes assets used to support but not engage in communications. Includes store, warehouse and shop tools, and test and laboratory assets. Includes communications-related assets used to provide cable television community antenna television services. Does not include assets used to provide subscribers with two-way communications services. Includes assets such as towers, antennas, preamplifiers, converters, modulation equipment, and program non-duplication systems.

Does not include headend buildings and program origination assets. Includes assets such as trunk and feeder cable, connecting hardware, amplifiers, power equipment, passive devices, directional taps, pedestals, pressure taps, drop cables, matching transformers, multiple set connector equipment, and converters.

Includes assets such as cameras, film chains, video tape recorders, lighting, and remote location equipment excluding vehicles. Does not include buildings and their structural components. Includes assets such as oscilloscopes, field strength meters, spectrum analyzers, and cable testing equipment, but does not include vehicles. Includes assets such as towers, antennas, transmitting and receiving equipment, and broad band microwave assets if used in the provision of cable television services.

Does not include assets used in the provision of common carrier services. Includes assets used in the production, transmission and distribution of electricity, gas, steam, or water for sale including related land improvements. Includes assets used in the hydraulic power production of electricity for sale, including related land improvements, such as dams, flumes, canals, and waterways.

Includes assets used in the nuclear power production and electricity for sale and related land improvements. Does not include nuclear fuel assemblies. Includes initial core and replacement core nuclear fuel assemblies i. Does not include nuclear fuel assemblies used in breeder reactors. Includes assets used in the steam power production of electricity for sale, combustion turbines operated in a combined cycle with a conventional steam unit and related land improvements. Also includes package boilers, electric generators and related assets such as electricity and steam distribution systems as used by a waste reduction and resource recovery plant if the steam or electricity is normally for sale to others.

Includes assets used in the transmission and distribution of electricity for sale and related land improvements. Does not include combustion turbines operated in a combined cycle with a conventional steam unit.

Includes gas water heaters and gas conversion equipment installed by utility on customers' premises on a rental basis. Does not include gas producing systems and related systems used in waste reduction and resource recovery plants which are elsewhere classified. Includes assets used in the catalytic conversion of feedstocks or naphtha or lighter hydrocarbons to a gaseous fuel which is completely interchangeable with domestic natural gas.

Includes assets used in the manufacture and production of pipeline quality gas from coal using the basic Lurgi process with advanced methanation. Includes all process plant equipment and structures used in this coal gasification process and all utility assets such as cooling systems, water supply and treatment facilities, and assets used in the production and distribution of electricity and steam for use by the taxpayer in a gasification plant and attendant coal mining site processes but not for assets used in the production and distribution of electricity and steam for sale to others.

Also includes all other related land improvements. Does not include assets used in the direct mining and treatment of coal prior to the gasification process itself.

Excluding initial clearing and grading land improvements as specified in Rev. Includes assets used in the liquefaction, storage, and regasification of natural gas including loading and unloading connections, instrumentation equipment and controls, pumps, vaporizers and odorizers, tanks, and related land improvements. Also includes pipeline interconnections with gas transmission lines and distribution systems and marine terminal facilities.

Includes assets used in the gathering, treatment, and commercial distribution of water. Includes assets used in the production and distribution of steam for sale. Does not include assets used in waste reduction and resource recovery plants which are elsewhere classified. Includes assets used in the conversion of refuse or other solid waste or biomass to heat or to a solid, liquid, or gaseous fuel.

Also includes all process plant equipment and structures at the site used to receive, handle, collect, and process refuse or other solid waste or biomass to a solid, liquid, or gaseous fuel or to handle and burn refuse or other solid waste or biomass in a water-wall combustion system, oil or gas pyrolysis system, or refuse derived fuel system to create hot water, gas, steam and electricity.

Includes material recovery and support assets used in refuse or solid refuse or solid waste receiving, collecting, handling, sorting, shredding, classifying, and separation systems. Does not include any package boilers, or electric generators and related assets such as electricity, hot water, steam and manufactured gas production plants classified in classes Does include, however, all other utilities such as water supply and treatment facilities, ash handling and other related land improvements of a waste reduction and resource recovery plant.

Includes assets used in wholesale and retail trade, and personal and professional services. Includes section assets used in marketing petroleum and petroleum products. Any high technology medical equipment as defined in section i 2 C which is described in asset guideline class Includes section assets, including service station buildings and depreciable land improvements, whether section property or section property, used in the marketing of petroleum and petroleum products, but not including any of these facilities related to petroleum and natural gas trunk pipelines.

Includes car wash buildings and related land improvements. Includes billboards, whether such assets are section property or section property. Excludes all other land improvements, buildings and structural components as defined in section 1. Includes assets used in the provision of entertainment services on payment of a fee or admission charge, as in the operation of bowling alleys, billiard and pool establishments, theaters, concert halls, and miniature golf courses.

Does not include amusement and theme parks and assets which consist primarily of specialized land improvements or structures, such as golf courses, sports stadia, race tracks, ski slopes, and buildings which house the assets used in entertainment services.

Includes assets used in the provision of rides, attractions, and amusements in activities defined as theme and amusement parks, and includes appurtenances associated with a ride, attraction, amusement or theme setting within the park such as ticket booths, facades, shop interiors, and props, special purpose structures, and buildings other than warehouses, administration buildings, hotels, and motels. Includes all land improvements for or in support of park activities, e.

Theme and amusement parks are defined as combinations of amusements, rides, and attractions which are permanently situated on park land and open to the public for the price of admission. This guideline class is a composite of all assets used in this industry except transportation equipment general purpose trucks, cars, airplanes, etc. The class life if any of property described in classes B, C, D, or E is determined by reference to the asset guideline classes in this revenue procedure.

If an item of property described in paragraphs B, C, D, or E is not described in any asset guideline class, such item of property has no class life. Was this article helpful? Yes No Great! Can you tell us why? We're sorry. Information Systems Information systems include computers and their peripheral equipment used in administering normal business transactions and the maintenance of business records, their retrieval and analysis.

Data Handling Equipment, Except Computers Includes only typewriters, calculators, adding and accounting machines, copiers, and duplicating equipment. Light General Purpose Trucks Includes trucks for use over the road actual unloaded weight less than 13, pounds. Heavy General Purpose Trucks Includes heavy general purpose trucks, concrete ready mix-truckers, and ore trucks, for use over the road actual unloaded weight 13, pounds or more.

Land Improvements Includes improvements directly to or added to land, whether such improvements are section property or section property, provided such improvements are depreciable. Agriculture Includes machinery and equipment, grain bins, and fences but no other land improvements, that are used in the production of crops or plants, vines, and trees; livestock; the operation of farm dairies, nurseries, greenhouses, sod farms, mushroom cellars, cranberry bogs, apiaries, and fur farms; the performance of agriculture, animal husbandry, and horticultural services.

Single purpose agricultural or horticultural structures within the meaning of section 48 p of the Code. Mining Includes assets used in the mining and quarrying of metallic and nonmetallic minerals including sand, gravel, stone, and clay and the milling, beneficiation and other primary preparation of such materials. Offshore Drilling Includes assets used in offshore drilling for oil and gas such as floating, self-propelled and other drilling vessels, barges, platforms, and drilling equipment and support vessels such as tenders, barges, towboats and crewboats.

Petroleum Refining Includes assets used for the distillation, fractionation, and catalytic cracking of crude petroleum into gasoline and its other components. Construction Includes assets used in construction by general building, special trade, heavy and marine construction contractors, operative and investment builders, real estate subdividers and developers, and others except railroads.

Cutting of Timber Includes logging machinery and equipment and road-building equipment used by logging and sawmill operators and pulp manufacturers for their own account. Sawing of Dimensional Stock from Logs Includes machinery and equipment installed in permanent or well established sawmills. Sawing of Dimensional Stock from Logs Includes machinery and equipment installed in sawmills characterized by temporary foundations and a lack, or minimum amount, of lumber-handling, drying, and residue disposal equipment and facilities.

Manufacture of Finished Plastic Products Includes assets used in the manufacture of plastics products and the molding of primary plastics for the trade. No production facility can last forever. Equipment wears out, facilities undergo wear and tear and machines become obsolete. When trying to get a picture of the current status of a company, the state of its physical assets is something that needs to be considered — not only practically but financially as well.

There are four different methods for depreciating assets under GAAP: straight line method, units of production method, declining balance method and the sum of years. Different rules apply depending on which method you use. Land is not considered to be something that depreciates, as land is not used up and does not wear down.

However, physical structures on land including buildings, fences and roads are included in the calculation of depreciation values for accounting purposes as well as all types of equipment in use within the business. The estimations and math for depreciation could easily become confusing, but generally accepted accounting principles provide a set of standards to do so. GAAP depreciation methods are a combination of standards, principles and procedures provided by policy boards to accountants to help consistency, compliance and analysis.

GAAP depreciation conventions are generally focused on American businesses, although with markets expanding across the world, many companies have transitioned to using the International Financial Reporting Standards to keep compliant with their international suppliers and customers. This is because all pieces of equipment have minor differences, uses may change over time and human error might introduce a break or flaw that was not considered. The manufacturer of the equipment should be able to help predict lifetime, and if similar equipment has been used in a facility before, that can be taken into consideration.

The estimate should be as accurate as possible, but the calculation of depreciation can be done with estimates and still be formal in the accounting books. There are four main models of depreciation under GAAP. Each model has its own strengths and weaknesses, and accountants should consider all angles when deciding what type of depreciation to record in the books. The straight-line depreciation method is a simple calculation, dividing the depreciable value the asset cost — the residual value over the years of active life.