Contra Accounts, Explained: Why Your Lender Reads the Net Number, Not the Gross One
Contra accounts offset their parents without erasing them: lenders underwrite net receivables, net equipment value, and net sales — not gross.
#depreciation
Depreciation
Methods and strategies for depreciating fixed assets including straight-line, MACRS, and accelerated depreciation
Real Estate Dealer vs. Investor: Why the Same Gain Is Ordinary Income for a Flipper and Capital Gain for a Landlord
Dealer flips face IRS ordinary income plus self-employment tax; investor sales get capital-gains rates, installment sales, and 1031 exchanges.
Depreciation Methods Compared: Straight-Line, Declining-Balance, Units-of-Production, and Sum-of-the-Years'-Digits
All four depreciation methods expense the same total — they differ only in timing. Compare formulas, salvage-value handling, and when each fits.
Fiduciary Accounting Income, Explained: How Trustees Split Principal From Income
Fiduciary accounting income, not taxable income, sets trust distributions — dividends and rent to the income beneficiary, capital gains to principal.
Units-of-Production Depreciation, Explained: How to Turn Lifetime Output Into a Per-Unit Write-Off
Divide cost minus salvage by lifetime output for a per-unit rate, then multiply by actual production — ideal for equipment with uneven usage.
Amortization vs. Depreciation: What Each Method Expenses, and the Loan Schedule That Confuses Everyone
Depreciation expenses tangibles minus salvage value; amortization writes off intangibles with none — and the IRS stretches acquired intangibles over 15 years.
Change in Accounting Estimate vs. Change in Principle: Why a Longer Useful Life Hits Prospectively While LIFO-to-FIFO Restates the Past Under ASC 250
Estimate changes apply prospectively; principle changes restate history via retained earnings — and the IRS wants Form 3115 for the tax side.
Reverse 1031 Exchanges, Explained: How Buying the Replacement Property First Still Defers Your Tax
A reverse 1031 exchange lets you buy the replacement property first under the IRS safe harbor — then sell the old one within 180 days.
Capitalization Policy, Explained: The $2,500 and $5,000 De Minimis Safe Harbors, the Annual Election Statement, and the Companion Rules
IRS de minimis safe harbor — expense business items up to $2,500 ($5,000 with audited financials) with a written policy plus an annual election.
Form 4562, Explained: How Small Businesses Report Section 179, Bonus and MACRS Depreciation, Listed Property, and Amortization
Form 4562 reports Section 179, bonus and MACRS depreciation across six parts — expense first, bonus second, MACRS on the rest.
Historical Cost vs. Fair Value: Why Your Balance Sheet Records What You Paid, Not What It's Worth
GAAP books assets at what you paid, not what they are worth — except securities, write-downs, and crypto, which follow fair value.
Lease vs. Buy for Business Equipment: How to Run the Analysis Like Your Banker Would
Leasing vs. buying comes down to after-tax present value — Section 179 favors buying, obsolescence risk favors leasing. Run the NAL to decide.