We depreciated an asset for five years MACRS with a large salvage value. Originally it was expected that the asset would be sold after five years. How do we S/L depreciate that leftover salvage value now that the client has decided to keep the asset longer without messing up the balance sheet?
I HAVE ALL THE COMMENTS I NEED. THANKS FOR THE SNARKINESS ESPECIALLY.
Is this for tax returns? If so ...
Salvage value? Didn't that end in 1986?
You also can't pick-and-choose to depreciate something over 5 years just because you think you will have it for 5 years. You must use the IRS pre-set "Recovery Period".
As for what to do now, assuming that the salvage value should not have been done, you need to amend the prior years to correct the depreciation. No salvage value. However, if 5 years was the incorrect Recovery Period, you need to use Form 3115 to correct things.
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