Office furniture depreciation lowers a firm's operating profit.
Internal Revenue Service (IRS) rules and accounting principles allow a business owner to deduct depreciation of office furniture at the end of each period. Office furniture includes chairs, desks safes, lamps, telephones and fax machines.
Depreciation Defined
Depreciation is a business method that helps you recover the cost of machinery, equipment or furniture that you bought. You do not have to pay for depreciation, unlike salaries or material costs. However, depreciation is financially advantageous because it lowers your taxable income.
Office Furniture Depreciation
The IRS allows taxpayers to depreciate office furniture and report depreciation expense in annual fiscal reports. You may depreciate office furniture over seven years. For instance, if you buy a set of lamps valued at $700, the annual depreciation expense for the lamps is $100.
Accounting and Reporting
To record office furniture deprecation, debit the depreciation expense account and credit the accumulated depreciation account. At the end of the month and quarter, report depreciation expense in the statement of profit and loss. You will also need to report accumulated depreciation in the balance sheet.
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