Generally, assets held by SMSFs do not need to be depreciated, but can be revalued whenever appropriate. Prices for ASX-listed direct equities update automatically.
You may wish to revalue Alternative Assets such as artworks, collectibles, vintage cars, etc.
For assets other than Direct Property, Asset Depreciation is entered by simply revaluing the Asset.
Depreciating Direct Property Assets
The procedure for depreciating direct property, property fixtures and fittings and plant and machinery differs from the procedure for depreciating other assets.
To depreciate property, you must Edit the Asset.
Click the ASSETS tab on the main menu and locate the property in the assets list and click on it.
The Edit New Asset screen displays showing details of the selected property.
Mclowd displays the property details in the Edit New Asset screen.
Move to the bottom of the screen and click ADD ANOTHER ITEM to add a row for your depreciation entry.
Enter the date depreciation was claimed in both Purchase and CGT date columns. Choose the Depreciation type (Buildings, Fixtures and fittings, or Plant and machinery. Mclowd will select the correct Depreciation Account based on your selection and display it in the From Account column.
Enter a description.
You can add further rows, if desired, to separately depreciate extensions to the property, renovations, fixtures and fittings and/or plant and machinery.
Mclowd will calculate the new current depreciated value of the property and display it in the Totals field.
Click UPDATE ASSET to save.
The chart of accounts provides three Depreciation Expense Accounts:
and three Depreciation Investment Accounts:
When you inspect these account in Accounting, you will see that Mclowd has transferred the Depreciation amount correctly into these General Ledger accounts, debiting the Expense account and crediting the Investment account.
Depreciation – Building – Tax Adjustment vs Depreciation – Building – Tax Deductible
1. Depreciation – Building – Tax Adjustment
Selecting this option will reflect the depreciation expense for building in the tax return only. It will not appear both in the operating statement and trial balance. Also, this will be shown as a cost deduction only when the property is disposed.
2. Depreciation – Building – Tax Deductible
Selecting this option will reflect the depreciation expense for building in the operating statement, trial balance and tax return. The expense will be shown in the asset report as a deduction from the cost all the time.