Book Keeping Task/Depreciation


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[edit] Status of this Document

This procedure was reviewed and accepted by the lead auditor, Susanna MacGarva, 2016-01-29.

[edit] Procedures

[edit] Fixed Assets

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. An account is created for the category, if one does not already exist.

If the individual items in a single purchase are less than $500, but the total purchase is $500 or over, they will be treated as a fixed asset if the items are to be used together. For instance, if 3 GPS were to be purchased at $300 each, they would be considered a fixed asset. But a single GPS at $300 would not.

In some cases, this practice has not been applied to purchases in previous years. PCSAR will continue to use the categories as is, without attempting to adjust for previous years.

Any fixed assets purchased within the year should be booked against a fixed asset account. Often there's already an account for that type of item (e.g. GPS's), but if not, create a new account for the new type of equipment.

[edit] Supplies

This section added 2020-02-23 and has not been reviewed by an auditor.

Supplies are items that are consumed in the process of the organization doing its work.

Supplies are not Fixed Assets and so should not be capitalized. Instead they are expensed at the time they are ordered. This applies even if a large inventory is ordered that will be consumed over several years.

Uniforms (e.g. SAR hats and shirts) are technically considered Fixed Assets (capital cost allowance class 12). But they are depreciated 100% in the first year -- with no half-year rule applying. This is the same way expenses are handled. So they can be treated as supplies. (, cached)

[edit] Amortization Expense

PCSAR follows Canada Revenue Agency’s Classes of Depreciable Property guidelines when depreciating assets. 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. Depreciation is done on the declining balance. I.e., the balance at end of the year is taken and used to calculate depreciation.


  • Satellite Phones $5000.00 depreciated value at start of the year. (This can be found on the previous year's balance sheet.)
  • purchased one more during the year for $1,000.00
  • 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.

Credit the depreciation account for the specific piece of equipment and debit the Amortization Account.

As of the 2015-08-31 fiscal year end, PCSAR classifies its fixed assets as:

  • Class 8 (20%)
    • The majority of PCSAR's assets
    • "certain property that is not included in another class", "other equipment you use in business."
    • Radios, Satellite Phones, inReach ("electronic communications equipment")
    • Trailers: because they are not passenger vehicles and they are not motorized
    • Storage Cabinet: "furniture"
  • Computer: Class 46 (30%)
  • Sierra Command Post: Class 10 (30%)
    • Because initial cost was not over $30K, cannot be Class 10.1
  • Pickup Truck: Class 10 (30%)
  • Equipment Shed: Class 6 (10%)
    • "made of ... corrugated metal" and "the building has no footings or other base supports below ground level"

[edit] Write off

When the declining balance of an account is less than $50, the entire balance will be written off.

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