Metropolitan Displays sells to the sole proprietor and to those on the wholesale end of needed display items including garment racks, Z-racks, two-way racks and other display items which are often bought in bulk. There are some general rules about depreciating garment racks and other display assets on your tax return and we’ll cover those rules here!
As a rule of thumb, garment racks or display items (or their total sum) should be in excess of $500 or more in order to take advantage of depreciation expense on your business tax return. Many of our wholesale buyers, however, buy large quantities of display items and are able to bulk them into one asset account as long as they have:
- A record of the purchase date – When it was purchased and placed on your financial books.
- The cost for each item in the asset account – What each asset item cost.
- The life expectancy of the asset – What is its useful life expectancy?
- The salvage cost of the asset – An estimate of what you could get for the asset after its life expectancy.
The reason it’s important to keep records of the purchase date and price is when it’s time to depreciate these display assets, you need to complete a depreciation schedule which you can easily do in Microsoft Excel—or some accounting software programs offer a break-down list of all assets that you can easily use to configure depreciation.
Now on to how to depreciate display assets! For example, let’s say in January of 2012, you purchased 50 of our deeply discounted commercial grade rolling Z-Racks at $60 dollars each—that’s $3,000.
In addition, let’s say also in January of 2012, you purchased 10 one-tier bulletin holders, 10, two-tier bulletin holders and 10 three-tier bulletin holders for around $30 each—that’s another $900.
Let’s say you expect the Z-Racks and the bulletin holders to last for five years and at the end of that five-year period, the salvage value will be $1,000.
Keep in mind all of our bulletin holders are now 10% off with a promo code of STAND10 throughout the month of February 2013!
We know you probably have a ton more of display equipment to depreciate, but for our purposes, we’ll give a simple example.
So, in total, you have $3,900 in your display asset account so how can you take advantage of depreciation expense at year end?
The calculation for the straight-line depreciation method is:
Assets ($3900) minus salvage value ($1000) divided by 5 years = $580
So in your asset account, you can take a $580 depreciation expense for year 2012 on the Z-Racks and bulletin holders.
If you need a great example of how to easily make a depreciation schedule in Microsoft Excel—you can find one here.
Revving Up with the New!
As display assets wear out, Metropolitan Displays is YOUR source for discounted display items. Our huge line-up of Z-Racks, garment racks, replacement parts and accessories helps to make these purchases much, much easier—without breaking your equipment budget.
Be sure to bookmark our blog because not only do we offer useful information about the display items we sell, we also provide useful business tips just as we did here with tips on how to depreciate your display assets!