What i recall of depreciation is, it’s not an allowable expense? But more a preparation for the future.
I have not included any depreciation in my accounting but have some items that have been AIA’d and need to be disposed of… some irreparable speakers, a laptop that is now completely dead and replaced, and an controller and accessories which were sold broken.
I know as they were AIA’d, the sale is income… but what of depreciation, and how do I fix depreciation for the future?
Currently all assets will be overstated… but thos is self employment so not really relevant I don’t think?..
Thanks
For those disposed of assets you can simply create a journal to Write off those assets:
Credit the fixed asset nominal code with the full value of the disposals.
Debit the nominal code 8005** (Fixed Asset Write Off) the same amount.
** You may need to create the 8005 nominal code.
The write off will reduce your profit but is not an allowable expense for the tax return in the same way as depreciation
From now on create a Journal for depreciation, here is an example of an annual Depreciation journal for two types of fixed assets
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