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Former Member
Sep 09, 2010 at 10:38 PM

Asset with Multiple Useful Lives


Hello all --

We have a number of assets that were incorrectly classified as 39-year life assets for U.S. tax purposes at the time they were placed in service. Some of these assets will have a relatively straight-forward change from 39 to 5 year lives. However, there are other assets where they will have to be split into 5 year as well as 7 year and depreciated accordingly. Please see my example below:

Asset #: 12345

Original Cost: $100,000

Original Useful Life: 39

Part #1 $70,000

Useful Life 7

Part #2 $30,000

Useful Life 5

Furthermore, because we did not take enough depreciation in prior years, we will be posting unplanned depreciation to catch up so that the current fiscal year's depreciation will be shown correctly. Part #1 and Part #2 will need to reflect their portion of the unplanned depreciation. Please advise on what the best course of action is.

Thanks in advance!