When to report a purchase under Furniture & Equipment/Fixed Assets vs. Supplies/Expense

d.riseberg · ‎August 27, 2021

We are an animal (cat) rescue using QB nonprofit.

We recently purchased a rug steam machine to clean the rugs we have, instead of renting a rug steam machine 4 times a year.

My first thought was to enter the cost of the machine as a depreciation item under Furniture & Equipment/Fixed Assets. Recently, I was speaking to someone (bookkeeper, not an accountant) who suggested I simply take it as a regular expense under supplies. Her reasoning was, it is not equipment used in the operation of our organization. It would be like buying a mop & bucket for the floors, those are supplies, except this is for rugs. If we were purchasing cages or other types of equipment that is needed to operate our organization, then it would be depreciated. Plus, she wasn't sure the cost of the machine would warrant being depreciated.

Is this correct, or do I need to depreciate the equipment?

Thanks

Rustler · ‎August 28, 2021

Weather or not to depreciate is a choice to some extent. The de minimus allowance by the IRS is a purchase of $2,500 or less can be expensed, so that is what most everyone does. I would suggest doing it that way too, just enter the purchase as an expense.

For this the time for depreciation would be 5 years IMO, so using straight line divided the purchase by 5 and that is the amount you would expense each year. Probably not real significant so I would expense it.

But the choice is yours

View solution in original post

Rustler · ‎August 28, 2021

Weather or not to depreciate is a choice to some extent. The de minimus allowance by the IRS is a purchase of $2,500 or less can be expensed, so that is what most everyone does. I would suggest doing it that way too, just enter the purchase as an expense.

For this the time for depreciation would be 5 years IMO, so using straight line divided the purchase by 5 and that is the amount you would expense each year. Probably not real significant so I would expense it.

But the choice is yours

KaymeaSedona · ‎January 31, 2024

This was my exact question. Thank you both!

Topics

Training

Community

Resources

When to report a purchase under Furniture & Equipment/Fixed Assets vs. Supplies/Expense