Too many problems when I started working.

I just learned how to calculate depreciation in different methods in school, also, The tax courses, Financial accounting courses, and auditing courses, and cost accounting course looked just seprated, never had a comprehensive view in school, so now, sometimes lots of confusions, specially, I am the only cost accounting people, and sometimes have to help Financial accounting people.. . but, anyway, I am starting to like my job now, hopefully it will be going well.

Depreciation for PPEs.Now, I have to do two different depreciation schedule, actually, I do not know why I have to do this work, this should not be my job responsibility, anyway, I am doing, and I do not hate it.

1. where can I get all those information of useful life of PPEs under GAAP, or I just give an estimated number based on my knowledge.

2. Should I seprate the computers and softwares that are attached on some machines for operating use. If so, how can I estamate the cost for computers and softwares, because they were bought as a whole.

3. How do I make the depreciation schedule of aircraft for Book(useful life), and Tax(very complicated, somebody says the IRS changes the law so often, currently what is it?)

4. Land improvements, some drainage system, Should I estimate the useful life combined with buildings or just seprate it as simple improvements, it seems combined both (for buildings, and improvements, I almost can not seprate the cost)

Alas!
Your help will be highly appreciate.

Okay that is a lot and I am not sure I understand it all 100% because there are a lot of typos but I will give it a shot. By PPEs I assume you mean Plant, Property and Equipment.

1. Yes useful life under GAAP is a “REASONABLE” estimate. Give the best estimate you can based on your knowledge and experience. Just make sure you can justify it, (don't try to say a building will only last 2 years for example).
2. If the computer was bought with the software pre-loaded and it was all included in one price I think it would be reasonable to deprecate it as one asset (as the computer itself). I would suggest 3 years as a reasonable useful life (I think that is what it is for tax also)
3. For an Aircraft I would use straight-line depreciation for GAAP, cannot tell you what the useful life would be (what kind of aircraft). You can call the manufacturer and discuss what a reasonable useful life might be. I do know that Aircraft themselves can last a very long time with proper maintenance and frequent engine over-hauls. For tax the useful life is currently 12 years. For any questions on tax deprecation see IRS PUB 946. Here is the 2007 version (2008 is not published yet) http://www.irs.gov/pub/irs-pdf/p946.pdf Tax is mostly based on MACRS (Modified Accelerated cost recovery system) how to calculate deprecation under this is a whole other discussion, but read Pub 946 that should get you started.
4. I am guessing that the drainage system is new and that the building has been standing a while? If that is the case you should classify the system as a capital improvement. You cannot roll it into the building because you already started deprecating the building. Is it attached to the building or for the building itself? If so I don't see how it would be a land improvement that would be more like a sidewalk, parking lot etc.

Hope that helps, if you appreciate my answer please give me a positive rating.

Hi Cost tramp. If you work for a small company then different types of accounting cross, so my suggestion is learn all the different types. It'll will only benefit you later. That is how I became a controller... cause I had to know all the different aspects... Cost is my best.

Deprecitation and/or FA analysis is to ensure that the amount accrued everymonth reflects the value of FA's. And the method that is suggested by GAAP is in line with the government for taxes. What ever method you chose according to the market the company is varies. However, what ever method you chose should be consistent. For instance if you use the straight line the only difference would be the years of life.

Thank both of you
Still working on it :)

In January 2008, JIM, purchased $350,000 of new MACRS (Modified Accelerated Cost Recovery System) 5-year property in the United States. This equipment was placed in service May 1, 2008. JIM wants to take as much depreciation in 2008 as possible.

Calculate the depreciation for 2008. If JIM had been located in a qualified enterprise zone, what would be the depreciation amount? Explain the depreciation method you used.

In addition, include the tax benefits (savings) for the first year and the present value of the total tax benefits for the entire 5-year period.

Discuss how the tax benefits and present value would change if a different method of depreciation was used.

Also, discuss when JIM would not choose to take as much depreciation as possible.

Could I get help solving this homework assignment. I am not quite understanding the depreciation process. I have researched the different methods of depreciation but would not know how to decipher which method to use over the other.

Thank you,

Under macrs a taxpayer may not take claim a depreciation deduction in the year that an asset is sold.