Depreciation

[TAX]

Quick question.

Client, scorp, has Assets (Car) worth $22,600 purchased in 2003

Depreciable basis is (31.11%) is $7031

Questions:

(1) On balance sheet (Sch L of 1120S) what amount should you include? $22,600 or $7,031. Client included $22,600 on Sch L - Line 10A. I think Asset should include full amount because "car" is a business asset and depreciation is applied only to part of the cost.

(2) Client depreciated $8,272 as of 12/31/2008 compare to dep basis of $7,031. What happens to $1,241 (Over depreciated in 2008). Obviously, No depreciation in 2009

Thanks!

[JG EA]

Quick question.

Client, scorp, has Assets (Car) worth $22,600 purchased in 2003

Depreciable basis is (31.11%) is $7031

Questions:

(1) On balance sheet (Sch L of 1120S) what amount should you include? $22,600 or $7,031. Client included $22,600 on Sch L - Line 10A. I think Asset should include full amount because "car" is a business asset and depreciation is applied only to part of the cost.

(2) Client depreciated $8,272 as of 12/31/2008 compare to dep basis of $7,031. What happens to $1,241 (Over depreciated in 2008). Obviously, No depreciation in 2009

Thanks!

The full amount of the asset goes on the balance sheet and the accumulated depreciation is subtracted and the net is the amount used. As you see on Sch L.

It should be allowed or allowable. If they actually took a wrong amount and you don't want to amend - I wouldn't in this case - then use the higher amount for the depreciation taken. It probably was a slightly higher percentage in a previous year which accounts for the difference.

But it is unusual to have only a % of the asset isn't it? Is it owned by the corporation? I'm assuming this is how they accounted for personal use. It is better than nothing but personal use should have been on wages.

[TAX]

More info on Dep

The full amount of the asset goes on the balance sheet and the accumulated depreciation is subtracted and the net is the amount used. As you see on Sch L.

It should be allowed or allowable. If they actually took a wrong amount and you don't want to amend - I wouldn't in this case - then use the higher amount for the depreciation taken. It probably was a slightly higher percentage in a previous year which accounts for the difference.

But it is unusual to have only a % of the asset isn't it? Is it owned by the corporation? I'm assuming this is how they accounted for personal use. It is better than nothing but personal use should have been on wages.

Yes it is owned by corp.

So for 2009 I would do following:

(1) Dr. Loan from shareholder 15569 (Excess amount in B/S and not WAGES)
Cr. Assets 15569

(2) Dr. Accudep $1,242 (Excess Dep)
Cr. Dep Expenses $ 1,242 (Excess Dep)

(3) For other expenses such as gas, repair etc record as usual (Business auto expenses)?

(4) When client sales then take sale price * 31.11% (% of business uses) and then figure loss or gain?

Please confirm if above entries/observations are correct.

[JG EA]

Yes it is owned by corp.

So for 2009 I would do following:

(1) Dr. Loan from shareholder 15569 (Excess amount in B/S and not WAGES)
Cr. Assets 15569

(2) Dr. Accudep $1,242 (Excess Dep)
Cr. Dep Expenses $ 1,242 (Excess Dep)

No, not that, but let me ask a question before I answer. They debited depreciation before so where did they credit?

(3) For other expenses such as gas, repair etc record as usual (Business auto expenses)?

Yes.

(4) When client sales then take sale price * 31.11% (% of business uses) and then figure loss or gain?

No, use what they took in depreciation. and the remaining basis is $14328. (Because we are assuming the % changed slightly over the years and this was the correct amount.)

[TAX]

No, not that, but let me ask a question before I answer. They debited depreciation before so where did they credit? Yes.
No, use what they took in depreciation. and the remaining basis is $14328. (Because we are assuming the % changed slightly over the years and this was the correct amount.)

They credited Accu Dep Account

[JG EA]

They credited Accu Dep Account

Well then you don't have to do anything - it's all been done. But why wasn't it on the L? I don't know. Should have been the net $14,328 in column d for last year.