ip3.docx - 1 Depreciation Repurposed work originally submitted on Individual Project Phase 3 Depreciation Martha Constance Taxation and Business

ip3.docx - 1 Depreciation Repurposed work originally...

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1 Depreciation Repurposed work originally submitted on July 25, 2019 Individual Project Phase 3 Depreciation Martha Constance Taxation and Business Decisions (ACCT618-1901B-01) September 6, 2019
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2 Depreciation As a C corporation there are expenses that must be accounted for when completing the financial statements at the end of the financial periods to ensure they are following the GAAP Principles and IRS guidelines. JIM needs to ensure they are getting the most value out of each tax deductions they have available due to the upcoming merger with Mason Machining, Inc. As the company purchases new property, equipment, office furniture, and machinery. These are all tangible assets that the company uses throughout the year that are recorded as an asset on the balance sheet. The tangible assets can have additional costs such as delivery and set up costs. As these tangible assets are recorded the depreciation must be recorded on your taxes. If you fail to record it in the current year you can only go back and file and amended return for up to three years. In the most recent year 2016, JIM has purchased a five-year property using the Modified Accelerated Cost Recovery System (MACRS) for the first three years to obtain the largest deduction for the purchase, then switching to the straight-line method for the last three years. For the first year even though the service date was not until May 1 st , based on the IRS and GAAP principles the first year would only be counted as half year after March[ CITATION Int181 \l 1033 ]. This means the first year and last year would be only a half year depreciation, so there would be six years in total. When trying to figure which depreciation method to use, you must
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