How do I record equipment purchases and depreciation?

Question

Expert Bookkeeping Services · Accepted Answer

Equipment used over several periods may be a fixed asset rather than an immediate expense. Track the purchase cost and depreciation separately; tax deductions may follow different rules from accounting depreciation. Decide what should be capitalised Review the item's use, expected life and the business's accounting policy. Costs needed to bring an asset into working condition may form part of its cost, while repairs and ongoing maintenance can be different. Keep the invoice, purchase date, serial number and any financing details. Do not assume that a tax allowance means the asset should disappear from the accounting records. Maintain an asset register Record useful life, depreciation method, business-use percentage and disposal details. Reconcile the register to the fixed-asset accounts at year-end and check for sold or unusable items. Ask your accountant to distinguish book depreciation from local tax allowances and recoverable indirect tax, especially for vehicles, leases and mixed-use equipment.

How do I record equipment purchases and depreciation?

Short answer

Detailed answer

Decide what should be capitalised

Maintain an asset register

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