Depreciation

Question 1

Tangible Property

Answer 1

physical in nature
land, structures, equipment natural resources

Question 2

Real property

Answer 2

real estate property other than real property

Question 3

Personal property

Answer 3

computer, software, patents, goodwill, stocks, and bonds

Question 4

Expenses

Answer 4

Expenditures that do not have a useful life beyond 1 year

Question 5

Capital expenditures

Answer 5

life greater than 1 year
increase value of property

Question 6

Depreciation

Answer 6

tangible income producing property

accounting process that helps companies earn revenue from an asset while expensing a portion of its cost each yea

Question 7

Depletion

Answer 7

Assets that diminish over time - oil, gas, etc

Question 8

Amortization

Answer 8

patents and goodwill

Question 9

3 basic factors to determine how depreciation should be deducted

Answer 9

1. basis in property
   2.recovery period for the property
   3.depreciation method

Question 10

Only deduct depreciation

Answer 10

used for business purposes or income producing activity

Question 11

when can you depreciate

Answer 11

1. own the property
2. property used for a business or income producing activity
3. property has a determinable life
4. expect property to last more than 1 year

Question 12

When does depreciation begin?

Answer 12

when property is placed in service