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equipment depreciation

Discussion in 'Business Operations' started by jgann, Apr 22, 2011.

  1. jgann

    jgann LawnSite Member
    Messages: 10

    How do you figure depreciation on a 2009 mower, new ones cost about 11k $.
  2. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,245

    How much did you pay for the mower?

    What is the anticipated life of the mower?

    Best to talk with an accountant.
  3. WheatBookkeeping

    WheatBookkeeping LawnSite Member
    Messages: 108

    Based on very limited information in your post, the short answer is: Claim the Section 179 depreciation deduction and depreciate the entire cost of the mower in the year you bought it.

    The long answer is:
    Depreciation is all about recovering your cost to acquire the asset. It doesn’t matter if its new or used. It doesn’t matter if you over paid or underpaid as long as the equipment cost you something and you have documentation to backup the fact that you paid something. If the equipment was a gift or something you found along side the road it is not depreciable for tax deduction purposes.

    You have a choice in the way you wish to depreciate (recover your cost) for the mower.

    The Section 179 deduction allows you to depreciate the entire cost of the mower in the year its placed in service. In your case this is probably the preferred method unless you are depreciating other equipment assets that push you over the Section 179 limit.

    Another way is MACRS which actually allows for two other depreciation methods, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Both of these methods allow you to depreciate purchased assets over a number of years. The GDS is the only method that could possibly apply to a mower. The ADS would probably never apply to a mower.

    Here are the elements involved with equipment depreciation in order to use the MACRS methods:

    The full price your business paid for the equipment.
    The date your business placed the equipment into service.
    The depreciation method used.
    The depreciation time span until the asset cost is fully recovered (depreciated).

    Hope this helps. . .

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