CH8 Definitions_IRS

CH8 Definitions_IRS - Depreciation Definitions MACRS...

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MACRS – Modified Accelerated Cost Recovery (IRS 1986), depreciation for tax purposes What we know now Asset Cost - initial cost of asset. Market Value – the amount that someone would be willing to pay for an item at some point in time. Useful Life – the expected life that the asset will produce income Production Expenses – labor, utilities, materials, insurance necessary for asset to produce income Definitions for tax purposes Cost Basis - initial cost of asset plus taxes, transportation, site preparation, installation. Book Value – the worth of the asset at some point in time as shown on accounting records (books). Defined as BV = Cost basis – depreciation deductions Recovery Period – the number of years of which the cost basis is recovered through depreciation (defined by MACRS) Recovery Rate – a percent defined each year by the MACRS recovery period to compute annual depreciation deduction Production Expenses + Depreciation Deductions – noncash business expenses that
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This note was uploaded on 04/03/2012 for the course ENGIN 106 taught by Professor Fizali during the Spring '12 term at Laney College.

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CH8 Definitions_IRS - Depreciation Definitions MACRS...

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