Question

Fixed Assets

Forum|Forum|1 year ago
January 27, 2025
2 replies
0 views

We have paid for half of a piece of equipment for our business in 2024. The remainder will be paid in 2025 with the equipment being delivered in February. We use cash accounting. How do I record the payments made in 2024? This is a depreciable asset.

TurboTax Business Windows

M

MinhT1

As the equipment is placed in service in February2025, you can only enter it as an asset and start depreciating it in 2025.

In 2024, you do not record the payment made in 2024 as an expense. If you have to submit a balance, it would be a current asset called Prepayment.

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C

CountingcatAuthor

Can I show the payments made this year as payments toward a liability?

VolvoGirl

You don't enter what you paid. You enter it as an ASSET and take depreciation on it. The deprecation is the expense. If you paid any interest on it you can expense the interest.

C

CountingcatAuthor

Is there any provision for expensing what we have paid so far on this asset? We had to pay a certain amount down just to place the order. The equipment is manufactured and customized when the order is placed and takes several months to complete. It is common for such equipment to bridge calendar years. The total cost is about $600,000 and we have paid about 50% in 2024.