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Limousine owners invest substantial resources in maintenance and repairs, ensuring their vehicles remain mechanically sound. Depreciation helps owners reduce corporate operating income and tax liabilities.
Identification
Limousine depreciation guidelines are procedures that corporations and small business owners follow when allocating the costs of vehicles over several years. Limousine owners depreciate vehicles over five years, in accordance with Internal Revenue Service (IRS) regulations. Limousines are considered long-term assets because they serve in operating activities for more than a year.
Types
Under IRS rules, a limousine owner may depreciate the vehicle using a straight-line or accelerated method. The straight-line depreciation method enables the owner to allocate the same amount each year. In an accelerated method, the owner depreciates larger amounts in earlier years.
Accounting and Reporting
To record the depreciation of a limousine, a corporate accountant debits the depreciation expense account and credits the accumulated depreciation account. Depreciation expense is an income statement account. Accumulated depreciation is a balance sheet item. A balance sheet is also called a statement of financial position.
References
Writer Bio
Marquis Codjia is a New York-based freelance writer, investor and banker. He has authored articles since 2000, covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.