2.4.1 depreciation basics

[Gregory Forster]

Woops, hit the wrong  button.

     Why are you writing checks?  Depreciation is just an allocation of 
the cost of an asset over a period of time with the benefit of the 
allocation expensed, which may have a tax  benefit, only if profit is 
made.  Create an expense account called, "Depreciation Expense."

     I have a numerical structure to organize accounts.  10000 accounts 
are assets, 20000 are liabilities, 30000 are equity, 40000 are income 
and 50000 are expense.  So account 52100 is depreciation expense, 11000 
is Truck (as an asset), and account 11500 Accumulated Depreciation - 
Truck (your "contra-account"). Say your truck  is $10,000.00 and you 
straight line it for 10 years.  (figures aren't actual, just very 
simplified).  You Debit 11000 Truck $10,000 and Credit your cash account 
(or checking account).  To depreciate, you Credit your Accumulated 
Depreciation account $83.33 and Debit Depreciation Expense $83.33.  Why 
$83.33? $10,000.00 / 10yrs = $1,000.00 per year.  $1,000.00 per year / 
12 months = $83.33 per month.

     I do all my depreciation calculations on a spreadsheet.  Then I 
carry the results over to GnuCash.

     In 10 years, when your truck is fully depreciated, your Accumulated 
Depreciation will be equal  to your asset.

Greg
former Enrolled Agent (Admitted to practice before the IRS), former tax 
accountant.

On 5/25/2014 3:02 PM, CCAAT wrote:
> OK
>
> So I performing my first straight line depreciation. Bought
> a truck, Wrote 2 checks a few weeks apart for it
> 5K for the truck, 668.62 for the taxes. Accountants
> says to do 60 month straight line
>
> math is 94.47 for 59 months and 94.89 for the 60th month.
>
> The 2 checks were first entered into the checkbook register
> as they occurred. I followed the depreciation example given
> in the  Ramachandran book (version 2.4) on page 159.
>
> After I was done creating the truck depreciation account for
> 5668.62 and manually put 3 months into depreciation for oct,
> nov and dec 2013, the check book register combined the checks
> as a single entry on the check book register.
>
> Advice or and explanation  or better yet a documented example of
> what to do so I can follow it wold be appreciated.
>
>
> James
>
>
>
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