Bonus Depreciation Methods in Sage FAS: Fixed Asset Management Solutions

You only use this option for assets using a depreciation method other than an ACRS or MACRS method. In addition, the asset must be personal property, it must have an estimated life of at least 6 years, and it must use a straight-line, declining-balance, sum-of-the-years' digits, own calculation, or custom calculation depreciation method.

For qualifying assets, you may be entitled to a 20% first-year depreciation bonus on up to $10,000 of eligible property placed in service during a taxable year prior to 1981.

FAS Asset Accounting™ calculates the bonus amount based on the preliminary depreciable basis of the asset without subtracting the salvage value. (The preliminary depreciable basis here is the acquired value times the business-use percentage.) If you take the bonus, the system subtracts it from the preliminary depreciable basis before making any further calculations. On reports, however, the system includes the bonus amount in accumulated depreciation, rather than showing it as subtracted from the depreciable basis.

The system does not let you enter more than $2,000 or 20% of the depreciable basis, whichever is less, as the bonus amount for any one asset. It does not keep track of your total bonus taken as you enter asset information. You must limit the first-year bonus depreciation taken according to IRS rules.

Salvage Value

The salvage value of an asset is the value it's expected to have when it's no longer useful. In other words, the salvage value is the amount for which you could sell the asset at the end of its useful life.

Straight-line, sum-of-the-years'-digits, and custom depreciation methods require that you subtract the salvage value from an asset's acquired value to determine its depreciable basis. Other methods (such as declining-balance) and vintage account property do not subtract the salvage value to determine the basis but will not depreciate an asset below its salvage value. ACRS and MACRS depreciation methods ignore salvage value in determining the depreciable basis and will depreciate an asset below its salvage value.

DEPRECIATION METHODS

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