Depreciation is Weird Accounting Archives | Value Investing

Hobbies – Business Perspective and Tax Compliance

Specialty Taxes / By David J Hoare MSA / 02/08/2014

Many people turn their hobbies into a business operation. Not so much to make a living or make big profits, but more to help offset the costs of the hobby. Whenever you go to one of those community fairs, the vendors at the respective booths are mostly folks selling a product that is direct outcome of their hobby. The bands that play on stage, they make some money, but never enough to offset the cost of instruments, gear and transportation. But they enjoy entertaining folks and they hope someday they’ll get discovered.

Accelerated Depreciation – An Explanation

Report Analysis - How to Read the Statements / By David J Hoare MSA / 12/17/2013

When it comes to depreciation, no two businesses are alike. Unlike traditional straight line depreciation where the asset value is costed out to depreciation expense in equal increments over a given life expectancy, accelerated depreciation expenses the cost at higher values during the earlier accounting periods and at a lower amount towards the last half of the asset’s life expectancy.

The Various Forms of Depreciation

Accounting Concepts and Principles, Report Analysis - How to Read the Statements / By David J Hoare MSA / 02/22/2013

There are various forms of depreciation used in the small business world. In general, depreciation is not required but it is advisable. A small business owner should understand depreciation and the various forms of how to calculate the deduction.

The Definition of Fixed Assets

Phase II - Financial Analysis / By David J Hoare MSA / 01/05/2013

Any tangible item not consumed within one accounting cycle (typically a year) and providing long term utility is referred to as a Fixed Asset. Traditional images include manufacturing equipment, tools, transportation vehicles, buildings and utility related systems (sewage systems, power grids, power plants and dams). In accounting, these assets are recorded to the balance sheet as ‘Fixed Assets’.

Small Business Tax Depreciation – Section 179

Accounting Concepts and Principles, Income Taxes / By David J Hoare MSA / 12/23/2012

The Internal Revenue Service sets the depreciation allowance based on the Code as promulgated by Congress. The most commonly referenced section is 179. This is a form of accelerated depreciation allowing the small business owner the opportunity to take a large expense deduction and reduce their tax obligation immediately.

Depreciation – This is Weird Accounting

Accounting Concepts and Principles, Report Analysis - How to Read the Statements / By David J Hoare MSA / 12/11/2012

In the world of accounting, there are two types of expenses on the reports widely misunderstood. They are depreciation and amortization. I will try to help the novice gain an understanding of depreciation in this article.