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Re: CCA / Depreciation of Capital Assets ?

On Thu, 2007-04-05 at 11:02 -0400, Leah Kubik wrote:
> I tried to send a question about this before, but I am not sure if it
> went 
> through correctly.  Anyhow, I'm doing my taxes and I'm trying to
> figure out 
> what is the best way to track in the Ledger-SMB Capital Assets on
> which I 
> claim CCA allowances yearly for.  
> That is, you can write off, say, 40% of the costs of a computer as a
> business 
> cost on your taxes, each year.  So the value of that asset, you have
> to 
> assume, is reduced by 40%.  I am trying to sort out what is the best
> way to 
> do this in the accounting system so that I know the next year what
> part of 
> the assets have been depriciated, what is still left, etc.  Has anyone
> come 
> up with a nice way to handle this?
> CCA is the specific term used for Canadian Capital Cost Allowance
> deductions:
> http://sbinfocanada.about.com/cs/taxinfo/g/capcostallow.htm

I know I'm late answering this but I'm just catching up on the list.

Normally in Canada and I think in most parts of the world this is
handled with 3 accounts

An asset account such as "Computers"
An asset account such as "Accumulated Amortization, Computers" that is
normally a negative balance therefor it is a contra account
An expense account such as "Computer Depreciation"

                                         Dr.             Cr.

When you buy a computer:
Computers                            1000.00
Bank Account                                         1000.00

End of year 1:
Computer Depreciation                 400.00                 40% of $1000
Accumulated Amortization, Computers                   400.00

End of year 2:
Computer Depreciation                 240.00                 40% of $600
Accumulated Amortization, Computers                   240.00

End of year 3:
Computer Depreciation                 144.00                 40% of $360
Accumulated Amortization, Computers                   144.00

Bank Account                           75.00                 sale of computer
Accumulated Amortization, Computers   784.00                 reversing entry
Computer Depreciation                 141.00                 residual value
Computers                                            1000.00 reversing entry

As Chris said there's no way at the moment to automate this within
LedgerSMB so you'll have to use GL entries.

Tony Fraser
Sybaspace Internet Solutions                        System Administrator
phone: (250) 246-5368                                fax: (250) 246-5398