Sage Fixed Assets Depreciation Fundamentals 2017.1 User guide January 2017 Last updated: December 19, 2016 © 2017 The Sage Group plc or its licensors. All rights reserved. Sage, Sage logos, and Sage product and service names mentioned herein are the trademarks of The Sage Group plc or its licensors. All other trademarks are the property of their respective owners. Sage End User License Agreement (EULA): http://na.sage.com/sage-na/eula Sage Fixed Assets Depreciation Fundamentals Contents Section 1:Introduction: Features and More Features... 1-i Section 1:Preface: Historical Overview 1-i A History of Depreciation . 1-vii Section I: Fundamentals of Depreciation I-1 What Are Fixed Assets? . I-1 Who May Claim Depreciation? . I-2 What Property May Be Depreciated? . I-2 Additional Expenditures . I-4 Financial Reporting . I-4 Elements of Depreciation . I-7 Tax Reporting . I-7 Type of Property . I-10 The Date Placed in Service . I-11 Estimated Useful Life . I-12 Depreciable Basis . I-12 Basis Used for Depreciation . I-12 Trade-ins and Basis . I-14 Miscellaneous Basis Issues . I-18 Multiple Depreciation Calculations: An Overview . I-19 Section II: Amortization II-1 Amortization of Property for Financial Reporting Purposes . II-2 Computer Software . II-2 Copyrights . II-3 Covenants-Not-To-Compete . II-3 Customer Lists . II-3 Easements . II-3 Franchises . II-4 Sage Fixed Assets - Depreciation Fundamentals Contents-1 Contents Goodwill . II-4 Leasehold Improvements . II-4 Organization Costs . II-4 Patents . II-5 Research and Development Costs . II-5 Trademarks and Trade Names . II-5 Amortization of Property for Tax Reporting Purposes . II-5 Pre-1993 Tax Act Rules . II-6 Post–1993 Tax Act Rules . II-6 Miscellaneous Amortizable Property . II-9 Section III: Depreciation for Financial Reporting III-1 Depreciation Methods for Financial Reporting . III-2 Straight-Line Method . III-2 Accelerated Methods . III-2 Production or Use Methods . III-6 Revising an Asset’s Estimated Life . III-7 Depreciation for Partial Periods . III-9 FASB ASC 740 (formerly FAS 109) and Depreciation . III-11 Deferred Tax Liability . III-13 Deferred Tax Asset . III-13 Disposed Assets . III-13 Establishing a Deferred Tax Account . III-14 Financial Reporting: A Summary . III-16 Section IV: Depreciation for Income Tax Reporting IV-1 Section IV: Chapter 1: First-Year Expensing IV-5 De Minimis Safe Harbor Rule . IV-5 Section 179 Expense . IV-7 Property Qualifying for the Section 179 Expense Deduction . IV-7 To Qualify By Type . IV-8 To Qualify By Use . IV-9 To Qualify By How Acquired . IV-9 Examples of Qualifying and Nonqualifying Property . IV-11 Limits on the Amount of the Section 179 Expense Deduction ..