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Year-end capital asset clean up question

We have some computer workstations that were pretty expensive when we bought them in 2009, but now sit idle b/c we laid off some engineers this past year. Should I write those off in 2010?

Answers

Steve Kahn
Title: Controller
Company: Carolina Lumber & Supply Co.
(Controller, Carolina Lumber & Supply Co.) |

I find the answer to most accounting questions is "it depends" -- here are a couple of thoughts for you to consider:
1) I assume they still have value -- just because you don't have the people there to use them does not make them un-useable or have a decreased value. so I would first attempt to apply a lower of cost or market process to write them down to market value (as appropriate).
2)there may be tax considerations -- for tax purposes, did you take an accelerated write off? You may have a tax issue if you get rid of an asset before the end ot its "useful life" if you took sec 179 expenses on them (ie you may need to keep them around even if you aren't using them)

Lyle Newkirk
Title: CFO
Company: Corrigo Incorporated
(CFO, Corrigo Incorporated) |

If you are never going to use them I would try to sell them which means you should mark them down to what you think you can get for them.
If you think they will be redeployed internally I would do nothing.

Kevin Roones
Title: Senior Accounting Professional
Company: In-between
(Senior Accounting Professional, In-between) |

Hi Jane. You say the workstations were pretty expensive when purchased in 2009, but the question is how material the NBV is now to your total assets. If the amount is material, under US GAAP the idling represents a significant adverse change in the manner that the asset is being used, so you would have to perform a recoverability evaluation under ASC 360. This might require you to write them down as suggested above.
Also, if material, the idled assets should be separated on the balance sheet, with appropriate disclosure made in the footnotes.
Hope this helps.

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