Fixed Assets and Depreciation Spreadsheet
How to Start in an Online Business
Phase 2 – Step 9
You can view all of my Posts by clicking on the following Link: HelpMeGetMine.com
You will not be able to complete your Fixed Assets and Depreciation Spreadsheet until you have reviewed my Post: IRS Depreciation Methods and made some decisions on the Depreciation Method that you will be using. Once you have reviewed that post and made your decisions, please continue.
First, open a new blank Spreadsheet. As you did with your 1st Spreadsheet, before beginning your Formatting, check to see what your default Font Size is by clicking on any cell. If it not the Font Size that you prefer to use for your information cells, you should Highlight all of the cells in Columns ‘A’ thru ‘P’ and Rows 1 thru 200. Then, click on the Font Size of your choosing. Also, check that Bolding is not on. Use the same Standard Formatting Guidelines.
Begin Formatting Your Spreadsheet
The first part of completing this Spreadsheet will merely be Copying & Pasting some of the information from the 1st Spreadsheet that you created: Business Startup Expenses. Begin your work as follows:
- Change your Column Widths to the following:
- Column ‘A’: (leave at 10 characters wide)
- Column ‘B’: (30 characters wide)
- Column ‘C’: (6 characters wide)
- Columns ‘D’ thru ‘H’: (leave at 10 characters wide)
- Columns ‘I’ thru ‘P’: (7 characters wide)
2. Now, leaving that new Spreadsheet open, also, ‘Maximize’ or ‘Open’ your 1st Spreadsheet: Business Startup Expenses.
3. Highlight Columns ‘A’ thru ‘D’ in your 1st Spreadsheet and Copy (click on the ‘A’, hold down and scroll to the ‘D’).
4. Highlight Columns ‘A’ thru ‘D’ in your 2nd Spreadsheet and Paste (all info should propagate). Check to make sure that all of your info copied correctly, including your Sub-Totals and Grand Total. If not, make any adjustments necessary.
Complete Your Formatting
You will continue Copying information from your 1st Spreadsheet and Pasting it into your 2nd Spreadsheet, along with adding some additional information in that Spreadsheet, as follows:
- Click on cell: ‘A1’ (in your 2nd Spreadsheet) and Delete the current information in that cell.
- Key in your new Title in cell ‘A1’: Fixed Assets and Depreciation – (current year).
- Format according to the Guidelines and Save your new Spreadsheet.
- Copy cell: ‘D1’ (in your 1st Spreadsheet) and Paste into cells: ‘E1’ thru ‘P1’ (into your 2nd Spreadsheet).
- Now, (in your 2nd Spreadsheet), beginning with cell: ‘E22’ and continuing in that Row, Key in the following Column Headings and Shade:
- cell ‘E22’: End Date (Shade: Bright Green)
- ‘F22’: Sect. 179 (Shade: Red with White Font)
- ‘G22’: Salvage (Shade: Yellow)
- ‘H22’: Adj. Cost (Shade: Red with White Font)
- ‘I22’: Year 1 (Shade: Turquoise)
- ‘J22’: Year 2 (Shade: Yellow)
- ‘K22’: Year 3 (Shade: Turquoise)
- ‘L22’: Year 4 (Shade: Yellow)
- ‘M22’: Year 5 (Shade: Turquoise)
- ‘N22’: Year 6 (Shade: Yellow)
6. Then, Copy all of those cells (‘E22’ thru ‘N22’) and Paste into the following cells (from your 1st to your 2nd Spreadsheet):
- ‘E49’ thru ‘N49’
- ‘E71’ thru ‘N71’
- ‘E94’ thru ‘N94’
- ‘E108’ thru ‘N108’
7. Now, Copy cells: ‘M71’ & ‘N71’ and Paste into cells: ‘O71’ & ‘P71’.
8. Change the text in cell: ‘O71’ to: Year 7, and change the text in cell: ‘P71’ to read: Year 8.
9. Copy cells: ‘I22’ thru ‘N22’ and Paste into cells: ‘I11’ thru ‘N11’.
10. In cell: ‘I5’, Key in: X mos. (replace the X with the actual number of months you were in business during the 1st Year.)
11. Copy cell: ‘A16’ and Paste into the following cells:
- ‘C16’ thru ‘N16’
- ‘C43’ thru ‘N43’
- ‘C65’ thru ‘N65’
- ‘C88’ thru ‘P88’
- ‘C102’ thru ‘N102’
- ‘C135’ thru ‘N135’
- ‘C139’ thru ‘P139’
- ‘C149’ thru ‘P149’
Your 2nd Spreadsheet Formatting is complete. Easy peasy, right?
Now, on to completing your 2nd Spreadsheet. First, some information:
Cost Basis of an Asset
Before you can list the Cost of an Asset, you should understand that it involves more than just the purchase price. In order to get the best Tax Deductions possible, you should also add any of the following applicable related Costs:
Cost Basis of an Asset = Purchase price of the Asset + Sales tax + Shipping and delivery costs + Installation charges + Other costs
- Purchase price of the Asset – The amount you paid for the equipment, vehicle or other Asset purchased.
- Sales tax – This is the amount you paid in sales tax (if any) for the Asset.
- Shipping and delivery costs – Include shipping or delivery charges you paid to get the Asset to your place of business.
- Installation charges – Any amount paid to install the equipment or furniture at your place of business.
- Other costs – Be sure to include any other Expenses that you had to pay to make the Asset usable for your business. Example: If you purchased a new machine and you had to have a technician come out and calibrate it before you could use it, the amount paid to the technician should be included in the Cost Basis of the machine.
Life Expectancy Guidelines
Various types of property are subject to different periods of time over which they must be Depreciated. Depreciation calculates how much of an Asset’s Value is “used up” over these periods of time:
- Manufacturing Tools and Tractors: 3 years
- Computers, Office Equipment, Light Vehicles and Construction Equipment: 5 years
- Office Furniture and Miscellaneous Assets: 7 years
- Residential Real Estate: 27.5 years
- Commercial Real Estate: 39 years
- Improvements to Land: 10, 15, or 20 years (with some exceptions)
Life Expectancy of Your Assets
Your Fixed Assets and Depreciation Spreadsheet will be used to list all of your Fixed Assets and help you to determine your yearly Income Tax Deductions for these Items. Even though most of these Assets will have a Life Expectancy of 5 Years (some will have 7), if you start your business in any other month other than January, you will have to pro-rate the 1st year’s Deduction based on the percentage of the year that you were in business. Therefore, you will have a remaining Depreciation balance left over after the 5th year (or 7th), which will be deducted in Year 6 (or Year 8).
Example: If your Item has a Life Expectancy of 5 Years, and your Business Start Date is: August 18th, you would use 1/3 or your allowed Deductions for the 1st Year, and 2/3 of your allowed Deductions for the 6th Year.
Complete Your Spreadsheet
Now, it is time to complete your 2nd Spreadsheet by calculating your Depreciation Deductions for each Item, and for each Year. If you do this initially, then your work in this area will be done for all upcoming years for the Depreciation Deductions for all currently listed Items. The only changes that you will need to make, is if you sell, retire, or delete a current Item, or when you add new Items to your Spreadsheet.
For all Items in all Categories initially entered in your Spreadsheet, your entry in Column ‘D’ (Start Date), should be the same as your Business Start Date. New Items added later will have their own Start Date.
Complete each Category as follows:
Direct & Indirect Expenses
All Copying & Pasting from now on, will be done within your 2nd Spreadsheet (not from the 1st to the 2nd).
Beginning in the section: Direct & Indirect Expenses, in your Spreadsheet: Fixed Assets and Depreciation (for the current year), do the following:
- Copy cell: ‘A13’ and Paste into cell: ‘I13’.
- Copy cell: ‘A14’ and Paste into cell: ‘I14’.
- Using the ‘Easy Calculator’, add cells: ‘I13’ & ‘I14’. Your result will go into the Sub-Total in cell: ‘I16’.
Since both of the Items in this Category are fully Deductible in the 1st year, no other entries are needed. This section is complete.
In this area, as well as for all Items in the other remaining Categories, you will need to compute the Depreciation in the appropriate cells, for every Year, using the Depreciation Method that you have selected, as follows:
- For each Item for which you are using the Straight-Line Method, Key in the estimated ‘Salvage’ amount in the appropriate cell.
- Using the ‘Easy Calculator’, subtract the ‘Salvage’ amount (Column ‘G’) from the ‘Cost’ (Column ‘A’), with the end result showing in Column ‘H’ (‘Adj. Cost’).
- Using the Depreciation Method amounts for each for Depreciation. Where applicable, use the ‘Item’ amounts to compute your all Years amounts. Where applicable, use the ‘Adj. Cost‘ amounts to compute your Depreciation amounts.
- For each Item for which you are taking the Section 179 Expense, Copy your ‘Cost’ amount in Column ‘A’ and Paste it into Column ‘F’, as well as Column ‘I’.
All Other Categories
Complete all of the other Categories in the same way that you did the first one. When each one is complete, use the ‘Easy Calculator’ to acquire your Sub-Totals and complete your all Sub-Totals and GRAND TOTALS sections in all appropriate cells.
Your 2nd Spreadsheet is now complete for the time being. You can add any additional Items as you acquire them, Keying them into the appropriate Category, with the appropriate ‘Start Date’, and completing all the associated cells.
Be sure to leave a Comment or ask a Question in the Comments section below.
When you are ready, see my next Post: Free Spreadsheet Templates.