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Established Community Backer ***

Re: Entering equipment purchase with a loan

Let's back up some.

You purchased a fixed asset with a loan (no downpayment mentioned so I expect there is none)

 

That is a fixed asset type account and a liability account, both should have the same value, a journal entry is one way to do it after the accounts are created

debit fixed asset, credit loan liability, $$$$

 

Payments do affect the loan, they are NOT an expense.  Unless there is interest on the loan, in that case the payment is split, $$$$ to interest expense, and $$$ to the loan liability.  So the question is, is there interest on the loan?

 

You do not write off a loan at all.  The fixed asset is subject to annual depreciation per the tax authority (IRS pub 946 if you are in the US)

 

You can for some types of fixed assets use Section 179 to write off the whole fixed asset value - but that does not affect the loan, you still have to pay it.  This is a question for a tax accountant to help you with.

 

The deminimus amounts for a c-corp was changed to 5,000 as I understand it, double check with your tax accountant.  The rest of us have a deminimus of 2,500.

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