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Client Name, LP. Accounting Procedures: General Asset Accounts. General Information. Available for assets placed in service: In same year With same asset class With same depreciation method With same recovery period, and With same convention Treated as single asset for depreciation.

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client name lp

Client Name, LP

Accounting Procedures:

General Asset Accounts

general information
General Information
  • Available for assets placed in service:
    • In same year
    • With same asset class
    • With same depreciation method
    • With same recovery period, and
    • With same convention
  • Treated as single asset for depreciation
advantages of using gaa
Advantages of Using GAA
  • Simplified receipt of assets
  • Simplified bookkeeping
  • Simplified disposition of assets
  • Simplified tracking of assets for accounting and tax purposes
  • If any assets are disposed of during a year, depreciation continues unchanged
  • Section 179 expensing still available
  • Eliminates need to track individual components of devices
disadvantages of using gaa
Disadvantages of Using GAA
  • Any dispositions before end of life of the GAA are recorded as the sale of an asset with a ZERO adjusted basis – all proceeds included in taxable income
  • Proceeds taxed as ordinary income / depreciation recapture
  • No losses allowed
  • Election required each year on tax return for assets placed into service that year
procedures
Procedures
  • Each invoice for purchase of devices segregated into:
    • GAA for that year
    • Items to be expensed, ie, templates
  • GAA items booked into Fixed Assets in QuickBooks with date designation
  • Depreciation booked at end of year, quarterly or monthly
quickbooks changes
QuickBooks Changes
  • Some account name changes
  • Separate accounts for office equipment, computers, leasehold improvements, etc.
  • “Device” GAA parent account
  • GAA subaccount with year designator
    • Devices:2005
    • Devices:2006
  • Separate Excel spreadsheet or database to track serial numbers in particular year
gaa example
GAA Example
  • Assumptions
    • Units placed into service this year: 200
    • Cost per unit: $125
    • MACRS recovery period: 5 year
    • Convention: Half-year
  • Disposition of 75 units in Yr 2 for $50/unit
  • Disposition of remaining units in Yr 4 for $40/unit
summary
Summary
  • Simplifies device acquisition and accounting
  • Over time, net taxable income using GAA identical to tracking discrete devices and/or components
  • Significant time savings
  • No need to change current device tracking methodology