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Depreciation

April 26th, 2001 by Murray McLean
As we use business assets, they depreciate - but how you account for this can be quite tricky. Murray McLean discusses some of finer points of accounting for depreciation.
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ans Serif">Depreciation effectively provides you with a deduction for capital expenditure, where capital expenditure is not normally deductible. Depreciation is an allowance that acknowledges the fact your business assets eventually wear out or become out of date, even though you routinely maintain and repair them. For tax purposes, the reduced value of an asset is recognised by allowing a deduction against income for the depreciation of that asset from the time it is used in a business until it is sold, disposed of or discarded. The end result is that the cost of the asset will be written off over its useful life. Once the whole cost price of the asset has been written off, no further deduction is allowed.

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Murray McLean's picture
Murray McLean
McLean and Co.

This article has been compiled by Murray McLean of McLean and Co., Chartered Accountants, a home-based business in Clive, Hawkes Bay which assists it’s small business, self employed person and property investor clients throughout New Zealand in Taxation, Accountancy and Business Advice and Development Support matters. Its website, www.mcleanandco.co.nz provides valuable tax and business information and business website links, and advises how to become a client.. Murray McLean is also the promoter and developer of the website www.taxreturnz.co.nz, which features an extensive taxation and business knowledge centre and assists in locating suitable Taxation and Accounting professionals and related Business professionals within New Zealand who can assist with taxation and business matters.

The views expressed in this article are the author's own and are intended as guidelines only. Readers are advised to seek professional advice pertaining to their own circumstances.

Hawkes Bay