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fgt
February 3, 2019
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Depreciation and Book Value for Fixed Asset with Partial Personal Use

  • February 3, 2019
  • 1 reply
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Hello,

 

I have a computer that was purchased for my LLC for $400.  It is being used 75% for business use and 25% personal.  I'd like to record the asset's correct book value and depreciation. I'll be 179 depreciating the asset's full business use value this year.

 

I am trying to figure out what accounts to debit and credit for these transactions. 

 

I know the entries if these was 100% business use.  The part that is confusing me is the personal %.  If below are the 100% business use entries, how do they change to account for the $100 personal percentage of use? 

 

If 100% business.

purchase:

debit  - $400 computer fixed asset

credit -  $400 checking account

depreciation:

debit -$400 depreciation expense

credit - $400 accum depreciation

 

Thanks so much,

Eric

 

 

 

 

 

Best answer by qbteachmt

Don't bother with Fixed Asset and Depreciation. The IRS regulation is "$2,500 per item or invoice." A $400 computer is Expense, not Fixed Asset. And a Fixed Asset cannot truly have Mixed use; if it did, then someone is benefitting personally, such as an employee driving a company car is Taxed on the Value of that benefit.

 

Not this: "I'll be 179 depreciating the asset's full business use value this year."

 

It's Expense. If you are going to do your own taxes, make sure to stay current on all the tax rule changes, every year.

1 reply

qbteachmt
qbteachmtAnswer
February 3, 2019

Don't bother with Fixed Asset and Depreciation. The IRS regulation is "$2,500 per item or invoice." A $400 computer is Expense, not Fixed Asset. And a Fixed Asset cannot truly have Mixed use; if it did, then someone is benefitting personally, such as an employee driving a company car is Taxed on the Value of that benefit.

 

Not this: "I'll be 179 depreciating the asset's full business use value this year."

 

It's Expense. If you are going to do your own taxes, make sure to stay current on all the tax rule changes, every year.

    F
    fgtAuthor
    February 3, 2019

    Thanks so much!  That's very helpful.  You made my day.  I really appreciate your explanation.

     

    @qbteachmt wrote:

    It's Expense. If you are going to do your own taxes, make sure to stay current on all the tax rule changes, every year.

    I'll certainly heed your advice here as well.

    L
    LightArtPhoto
    January 20, 2020

    I actually have a similar question but my asset is worth more than $2,500 and I will be depreciating it across several years - how do I correctly record this? Am I right to assume that I just multiply both the credit & debit depreciation entries by percentage of business use?

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