If a business is disposed of prior to the end of the amortization period, the company/owner can deduct any remaining deferred start-up costs. However, they can deduct these deferred start-up costs only to the extent they qualify as a loss from a business.
Depreciable assets can be: exchanged, retired, or sold.
After the disposition of an asset (depreciable), an accounting entry is made to recognize any unrecorded depreciation expenses up to the date of the disposition. The asset's cost and accumulated depreciation are then removed from the respective general ledger accounts. The losses or gains (realized) associated with the disposition are recorded in a separate account and appear on the income statement named as either income (gains) or expense (losses).
Sample Questions 1 - 6
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InvestingA capitalized cost is an expense associated with a fixed asset that is added to the basis of that asset and expensed over its depreciable life.
TaxesA Deferred Tax Asset is an asset on a company’s balance sheet that may be used to reduce taxable income. It is the opposite of a deferred tax liability, which describes something that will increase ...
InvestingThe declining balance method is a system for calculating an asset’s rate of depreciation against its non-depreciated balance.