Question 1

What is depreciation in business?

Accepted Answer

Depreciation is the process of spreading the cost of a long-term asset (equipment, vehicles, buildings) over its useful life. Instead of deducting the full purchase price in year one, you deduct a portion each year, which reduces taxable income.

Question 2

What is the difference between straight-line and accelerated depreciation?

Accepted Answer

Straight-line depreciation spreads the cost evenly over the asset's useful life. Accelerated methods (like MACRS or double-declining balance) front-load larger deductions in early years, giving you bigger tax savings sooner.

Question 3

Can I deduct the full cost of an asset in one year?

Accepted Answer

Yes, through Section 179 or bonus depreciation. Section 179 lets small businesses deduct the full price of qualifying equipment in the year of purchase, up to annual limits. Check current IRS limits, as they change yearly.

Question 4

What assets can be depreciated?

Accepted Answer

Tangible property used in business with a useful life of more than one year: computers, furniture, vehicles, machinery, buildings (not land). Intangible assets like patents are amortized, which works similarly.

Depreciation Calculator for Coffee Shop

Depreciation Calculator

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