Editing Book Keeping Task/Depreciation

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== Status of this Document ==
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== Fixed Assets ==
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This procedure was reviewed and accepted by the lead auditor, {{member|Susanna MacGarva}}, 2016-01-29.
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Any purchase of $500 or over for an asset that will not be used up in the year is placed in a Fixed Asset account.
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== Procedures ==
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=== Fixed Assets ===
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Any purchase of $500 or over for an asset that will not be used up in one year is placed in a Fixed Asset account.
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An account is created for the category, if one does not already exist.
An account is created for the category, if one does not already exist.
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But a single GPS at $300 would not.
But a single GPS at $300 would not.
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In some cases, this practice has not been applied to purchases in previous years.
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== Amortization Expense ==
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PCSAR will continue to use the categories as is, without attempting to adjust for previous years.
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Any fixed assets purchased within the year should be booked against a fixed asset account.
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Often there's already an account for that type of item (e.g. GPS's),
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but if not, create a new account for the new type of equipment.
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=== Supplies ===
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''This section added 2020-02-23 and has not been reviewed by an auditor.
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Supplies are items that are consumed in the process of the organization doing its work.
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Supplies are not Fixed Assets and so should not be capitalized. Instead they are expensed at the time they are ordered.
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This applies even if a large inventory is ordered that will be consumed over several years.
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Uniforms (e.g. SAR hats and shirts) are technically considered Fixed Assets (capital cost allowance class 12).
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But they are depreciated 100% in the first year -- with no half-year rule applying.
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This is the same way expenses are handled.
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So they can be treated as supplies.
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([https://www.taxtips.ca/smallbusiness/businessexpenses.htm taxtips.ca], {{link|Image:Members:2020-02-23 TaxTips.ca re uniforms.pdf|cached}})
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=== Amortization Expense ===
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PCSAR follows Canada Revenue Agency’s [http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html Classes of Depreciable Property guidelines] when depreciating assets.
PCSAR follows Canada Revenue Agency’s [http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html Classes of Depreciable Property guidelines] when depreciating assets.
Assets are depreciated at the specified percentage each year.
Assets are depreciated at the specified percentage each year.
50% of the stated rate is used for assets that are purchased within the financial year.
50% of the stated rate is used for assets that are purchased within the financial year.
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'''Depreciation is done on the declining balance.''' I.e., the balance at end of the year is taken and used to calculate depreciation.
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Depreciation are done on the declining balance.
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Example:
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* Satellite Phones $5000.00 depreciated value at start of the year. (This can be found on the previous year's balance sheet.)
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* purchased one more during the year for $1,000.00
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* Add the $5,000 and 1/2 of the $1,000.00 = $5,500.00 at 20% = $1,100.00 in depreciation which would be booked at the end of the year.
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Credit the depreciation account for the specific piece of equipment and debit the Amortization Account.
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As of the 2015-08-31 fiscal year end, PCSAR classifies its fixed assets as:
As of the 2015-08-31 fiscal year end, PCSAR classifies its fixed assets as:
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** Because initial cost was not over $30K, cannot be Class 10.1
** Because initial cost was not over $30K, cannot be Class 10.1
* Pickup Truck: Class 10 (30%)
* Pickup Truck: Class 10 (30%)
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* [[Equipment Shed]]: Class 6 (10%)
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* Equipment Shed: Class 6 (10%)
** "made of ... corrugated metal" and "the building has no footings or other base supports below ground level"
** "made of ... corrugated metal" and "the building has no footings or other base supports below ground level"
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=== Write off ===
 
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When the declining balance of an account is less than $50, the entire balance will be written off.
 

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