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You will need to continue depreciating assets using the original depreciation schedule.
But will deduct depreciation for the new business instead. Please consider following illustration example.
Assuming your asset is 5-year property
and you started depreciating it - first year 20.00%Second year 32.00%
After that - you start using the same asset for a different business - but continue depreciating untill it fully depreciated.Third year - 19.20%11.52%11.52%5.76%
If the asset is FULLY depreciated - its adjusted basis is zero - and you may not deduct any depreciation.
For accounting purposes - you may enter that asset as having $.01
Yes - for booking purposes - so that asset will be included.
But because it is fully depreciated - there is no equity.
There are two ways
- first - we may treat as shareholder contribution to the corporation - it will be added to the capital account.
- second - liability - the corporation will pay back but a later time.
Regardless - these are deductible expenses for the corporation and reported in the year paid.
Correct.You credit Shareholders' Contribution account
and debit Expense account.
Depending how your books are set - you might want to have two steps
(1) credit Shareholders' Contribution and debit Cash(2) credit Cash and debit Expense.
Yes - that would be another option.