Title: Can You Expense Improvements to a Building Under GAAP Accounting? | Small Business - Chron.com
Headings: Can You Expense Improvements to a Building Under GAAP Accounting?
Can You Expense Improvements to a Building Under GAAP Accounting?
Real Property Depreciation
Qualified Property Improvements
Depreciating Property Improvements
Methods of Depreciation
References

Content: A business owner in the United States uses the General Depreciation System unless the owner uses business property predominantly outside the country, listed property has less than 50 percent use for business, or is tax-exempt. Under the general system, a business owner depreciates an improvement using the IRS's guidelines for useful life in Publication 946. For example, if an improvement has a useful life of 15 years, a business owner deducts the total cost of the improvement over that 15-year period. Methods of Depreciation
Accountants working within GAAP can use any of three methods for depreciating property improvements within IRS regulations. If accountants use the General Depreciation System, they can choose from the 200 percent declining balance method, the 150 percent declining balance method or the straight-line method. The first two options are accelerated depreciation methods where the majority of improvement costs depreciate in the first years of the recovery periods. In the 200 percent method, accountants multiply the yearly depreciation cost by 200 percent to achieve the new accelerated depreciation rate. For example, a new lighting system with a total cost of $15,000 and a useful life of 15 years normally depreciates $1,000 each year or 6 percent. Multiplying this number by 200 percent gives a depreciation figure of $1,800 or 12 percent. In contrast, the straight-line method breaks up the cost of the improvements evenly over useful life.