Question

Truck depreciation and expenses

Forum|Forum|7 years ago
November 24, 2018
2 replies
0 views

I have a client, that owns a bike repair/ maintenance shop. He is building a truck for business use. He bought a truck body for 29K, suspension/equipment for 6K, bumper for 2K, etc. Should these large expenses be depreciated over 5 years? Other things like lights, doors, etc. (under 1K) I plan to expense as repairs/maintenance. Is this correct? Thank you.

QuickBooks Online

Rustler

you should set up an asset account for the truck, all costs to make it ready for use get posted to that asset account, there are no repairs when making something ready for use, it is all cost of the item

when the truck is put into use you create fixed asset account for the truck and do a journal entry

debit fixed asset truck, credit asset account for the full amount in that that asset account

the truck is subject to depreciation starting on the day it is put into use.

C

cdayAuthor

Thank you! I just found out my client is going to take a section 179 deduction this year for all truck expenses. How should I account for this in QBO? Should I create a fixed asset account and depreciation account, and then do a JR at year end, or should I put all expenses in an expense account called 'truck supplies' or something like that?

Rustler

yes the truck is a fixed asset, the 179 depreciation posts just as any annual depreciation entry

the result is a zero book value, but it stays on the books until sold or disposed of, there is scarp value if nothing else

expenses are not subject to section 179, only costs that are required to get the asset on hand and get it ready for use are item cost, and thus subject to section 179

D

DBurris1040

If I purchase a truck for work for $60K for my business and it is 90% business use and 10% personal use, would my QB entry be $54K fixed asset and $6k shareholder distribution?

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