How to Fill Out a Depreciation Worksheet
Depreciation is an accounting concept. It helps accountants track the wear and tear of assets over time. It is also used as a tax write-off against net income. As such, you will be asked to determine the annual depreciation expense for both net income and tax purposes. While there are many different methods used to calculate depreciation, most use the same basic variables. One such tool is a depreciation worksheet.
Other People Are Reading
Instructions
-
-
1
Identify and fill in the month and year in which the asset was purchased. Use this information to help determine the number of years over which the asset will be depreciated.
-
2
Determine and fill in the basic reason for depreciating the asset. In other words, why do you want to depreciate it? The two primary reasons are business write-off and investment.
-
-
3
Determine and fill in the recovery period. This is also referred to as the useful life on some depreciation worksheets. It is the number of years during which the asset will be useful. Some assets, such as land, may have a predetermined recovery period. The recovery period is usually given in years.
-
4
Identify the method of depreciation being used. The most common is the straight line (SL) method. The government also has a depreciation system referred to as the Modified Accelerated Cost Recovery System (MACRS). Most depreciation worksheets require you to know what methodology you are using to help compute the depreciation expense.
-
5
Calculate the depreciation deduction. This is also known as depreciation expense on worksheets. Fill out all sections of the worksheet to determine the final deduction.
-
1
References
Resources
- Photo Credit David Sacks/Lifesize/Getty Images
