Ask Experts Questions for FREE Help !
Ask
    mcquiston's Avatar
    mcquiston Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Feb 9, 2009, 07:52 PM
    Depreciation Method and Life of a Boat Slip?
    I currently own a rental unit on a lake. We purchased a boat slip just last year to rent as well, and I am trying to figure out what depreciation method and life to use for setting this asset up on a depreciation schedule? Any help on this would be appreciated.
    cutehanzel's Avatar
    cutehanzel Posts: 9, Reputation: 2
    New Member
    		  
    #2

    Feb 9, 2009, 08:19 PM

    the most commonly used is the straight line method. The theory behind it assumes that an asset should be depreciated in EQUAL amounts each year until it reaches its residual value (or scrap value). The residual value is the value that the business expects it to be worth when the asset has no use anymore.
    you must predict the expected life of the asset, i.e. the number of years that you believe the asset will be of use to the business.

    To calculate each years depreciation using the straight-line method, the formula is:

    Depreciation = Original Value (less) Residual Value / Expected Life
    codyman144's Avatar
    codyman144 Posts: 544, Reputation: 31
    Senior Member
    		  
    #3

    Feb 10, 2009, 10:38 AM
    Quote Originally Posted by mcquiston View Post
    I currently own a rental unit on a lake. We purchased a boat slip just last year to rent as well, and I am trying to figure out what depreciation method and life to use for setting this asset up on a depreciation schedule? Any help on this would be appreciated.
    I agree you should use the straight line method for depreciation. This is the most simple and makes the most sense I think for this example. Under GAAP there is no listing or suggestions of the estimated useful life you should use. It should simply be your best reasonable estimate based on past experience, manufacturer suggestions or any other evidence you can find. I wouldn’t worry about salvage value too much, many times it is okay to assume zero and then if you do sell it for something at the end of useful life you just book it as a gain.

    Now when it comes to tax depreciation there are strict rules you have to follow, call the Modified Accelerated Cost Recovery System or (MACRS) pronounced “makers”. These rules are complex so I recommend getting some kind of software that can calculate this for you. Or if you have someone else do you taxes don’t worry it will be their problem. More info on this can be found in PUB 946 which is here: http://www.irs.gov/pub/irs-pdf/p946.pdf

    If you have more questions let me know.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Double Depreciation method [ 2 Answers ]

I'm doing a problem where computer equipment is purchased for $154,000, with a salvage value of $25,000 after 4 years of use. I'm supposed to find the depreciation by using the double-depreciation method, but every way I try to figure it, the value is less than the salvage value in the 3rd year. Is...

Depreciation method [ 3 Answers ]

as asset cost of £80,000 has an estimated scarp value of £2048 and an estimated useful life of 4 years ITS REDUCING BALANCE METHOD WANT TO FIND RATE

Depreciation method and ethics [ 2 Answers ]

-------------------------------------------------------------------------------- Is it ethical for a company to assume assets are in use on the first day of the following month after they are purchased when computing depreciation? For example, if assets were purchased Feb. 8, but they are...

View more questions Search