Depreciation

Posted on Aug 12, 2011 | 0 comments

The useful life of an asset more than a year and is not a low-value commodity (see Glossary: ​​Low-value assets), so the asset over the period of official life is depreciated. Thus can not pay the entire purchase price in the year of purchase are tax deductible as a business expense or claimed as business expenses, but only the annual value of consumption in the form of writing.

Not only depreciable assets which are subject to no consumption value. Normally subject to vacant land, or works of art is not the acknowledged master and tear.

The amount of annual depreciation based on the useful life of the asset and to the depreciation method chosen or prescribed by law. The useful life is determined by the publication of an official depreciation table by the Federal Ministry of Finance and usually updated every two years. Also, the application for future depreciation method (eg straight line, declining balance) is required by law.

Basis for calculating the depreciation is the purchase or production cost of the asset. For acquisition of an asset flows therefore not only the purchase price, but also ancillary costs such as transportation costs and installation costs in the tax base for the depreciation of one.

For Members who purchase (the asset was not acquired in the first month of the year.) Is not the full year’s depreciation, but only for each month one twelfth of the annual depreciation to be set.

The depreciation of an asset fails, it can not be made up in later years.