yo yo yo what's going on out there I am CPA strength I am mr. omics
licensee today in the state of Florida and what do you do CPA strength I teach
the world accounting the basics building block my videos building block my
building blocks this is part of my classic series this is the classics this
happens to be number 61 saying hey bro sure number 61 that means you must add
60 other ones where are those six the other ones good question the other sixty
ones are the other 63 OHS are right over here
in this play this card right here it's the best playlist in the world for
accounting best playlist period it's like a genie bottle make our dreams come
true what are we going to talk about in accounting for beginners to classic
series risk control where does everybody think about the haircut I can see you
dislikes now but whatever yeah I live life sometimes right will that make the
cut who knows get back to this 161 bro sixty ones about differentiation is all
about depreciation it's all about depreciation I want to put in I know
we've talked a bunch about depreciation before we've done about ton of
depreciation journal entries we have just done a simulant depreciation you
think well this cooking this cookie and first buddy but it's like this plate
what came first the chicken or the egg and kind of how I started I kind of
scratch the big the big picture and then I started picking things up as it went
around the big picture that yeah you think I was going to do that huh well so
we're out there whoo oh boy boys a dull right are are anywho yeah we're doing
depreciation now ready to go deep and appreciate it really go deep into it you
know I'd like to say we're going through the next killer videos it's like to see
I just like you come along with it so anyways
I have I don't want to give a special shout out shout out to sleep number one
shout out to sleep number two actually no number one number one shout out I
want to give it to an art history teacher and when I went to Community
College in Eugene Oregon Lane County Lane County Community College and
probably 2000 rare white suit chisel whatever r2k as our history class and
Betsy was like oh it's a crazy world out there you know let's just Oh
turn turn the lights down and just and just forget about all the problems out
there and just look at our history slides and actually I used to I like to
do that so shout out the Betsy because I said just like get lost in all these art
histories and whatnot that's kind of how I feel now you know have to crazy roll
out there let's just forget about that crazy world and let's go to the land of
accounting where nothing's changed for you know five hundred years so it's like
our own little mythical world thing about what else hasn't been unchanged
for five hundred years like nothing right good you know I'm saying what's
good five hundred years ago it's good now where you still use not much all
right so we're doing to pursue basically we're doing depreciation that's the gist
of it and the next couple videos are going to about some depreciation eight
shown Exxon extra Jackson the definition of depreciation out of the book the
periodic recording of the cause of fixed assets as an expense to the periodic
recording so the annual to the annual and you will annual recording of the
costs of a fixed assets as an expense so the
costs we're going to annually record the costs of what of a fixed asset this in
our case in our case in six times it's going to be this pizza truck all right
yeah yeah yeah we're some pizza man we're slinging piece off this truck so
that's our fixed asset and we're going to peer on to record the costs annually
as an expense of depreciation expense so you let the cat out of the bag there are
in here that we're going to we're going to be slinging because I love pizza from
fat yeah you all know that obvious that's pretty obvious I love pizza and I
excited hey you know somebody else mowing eating yeah because I'm fat and
what do I want it what's my fictional business I could have any business in
the world I've been selling pizza that seems like the best because pizza is the
best so if you sell it that means you probably already have it so I could just
sell to myself hello sometimes you got to sync right so your song pizza' so
basically the ultimate depreciation is right you buy something like we bought
this truck for $5,000 we're going to keep it for going to keep it for five
years and we want to record the costs periodically we don't want to record the
cost all at once like when we buy it we don't want to just say oh car expense
you know I caught you know we don't want to put truck expense we don't want to do
that because you just use it for that one year and you're going to use it for
five years so you want to expense it over the time
you use it no better before so we're going to keep going
on now you might know all that you know although for so there's going to be
three there's three factors and I got this out of the book as well see there's
three factors in computing depreciation expense there's three factors so let's
see so let's say you just pulled up you're just pulling up in the new whip
on the inter 20s by the way these are 20s not tens they are clean though with
the are 20s I know you think is there tens and you keep them clean they're not
trying to delay our 20s okay these are 40s so you just pulled up here
nowhere and in Pizza whip and one of the three factors in computing depreciation
expense number one assets initial cost what is the initial at where the day it
was initial cost when you first bought it our first initial cost the pizza
truck $5,000 $5,000 second second factor so that's easy right then brain surgery
multinational cost number two what's the second factor assets expected useful
life okay how are we going to find out how to pick how many years asset will
last you can go to the IRS web rs they have they have charts you cast
your your tax preparer you might want to talk about you know we won't mess there
are we depreciating are we doing straight line or double declining
balance what method are we doing how many years are you depreciating it so I
can get my books correct so kinda just depends on the tap the tax repair and
what he's putting on the text the tax return you might just you might just do
a section once every night an expense the whole thing at once but that's for
something else but I I wouldn't worry about too much on you know just look
just look it up most things are going to be five to seven years it's not going to
be the end of the world if something is supposed to be depreciated in five years
and you depreciate it in seven years or vice versa you know it's also so you're
going to have you're going to you're going to expense
it in different times but it's all going to expense out and five you know in five
or seven years not the end of the world just do the best you can and everything
is going to be fine I just know I know from doing up tax
returns and I just plug I just played it in a way I just look at my tax system
where I'm doing when how I figure out depreciation I say oh I have a call I
have a vehicle and it'll say Oh vehicles five years I said okay five years boom
that's how that's how I figure out how many years of depreciation is third
third factor and computing depreciation expense the assets are a residual value
I guess that's for up to you the if you're trying to figure it out yourself
the business owner so after after five years after the useful life oh we're
going to get rid of it we're going to scrap it are we going to get any money
out of it how much money are we going to get how much more you expect to get I'm
going to tell you what in the next in the next couple examples we're going to
have estimated residual value of zero that's how much I'm going to expect it's
not a little thing when I was going in school and every single example I always
did they always had a residual value and don't worry we'll do a couple examples
with residual values in an example that I'm going to do is a pizza truck no
residual value because when I first got to my you know my job and you know my
guess my my real job well when I became a CPA and I started doing some tax
returns and some books and stuff right I noticed all willing all these assets
nobody has residual value and I don't know the lady taught me a lot without
any degree or anything but she knows a ton and she taught me the most anybody
probably the least education I worked with taught me the most so let that be a
lesson now which he was like now I mean now lives they're not once we're done
with the assets they're done with it like and you don't say I got my printer
once I'm done with that I'm just um freaking
oh here's very good to me but I'm going to slam it like office space or
something but so in our example we're not going to have and that just gets you
thinking with the real world like now the books are one thing you got to learn
the basics and in the real world you're off the porch you know what else is on
here what what date you has purchased that matter is also like if you buy if
you buy a safety bike in November oh this piece of truck in November well
only had it for two months of the year do I get to depreciate for the whole
year I mean no you would you would depreciate it for you know two out of
the 12 months of 2/12 you know one six so that's just another thing now it's
going to be in some examples and in the few bins of future videos the next cut
the next two videos we're going to do is so once you figure out that now you have
now you can decide this is the fun part for me like this is fun for me because I
just kind of figured this out through my own business after ten years like oh
this this appreciation method is going to save me money and oh that's where it
all means and it was like a light bulb Eureka but so we're going to do we're
going to take this Pizza trucks that cost us five thousand dollars it's going
to last five years and have zero residual value in the next video we're
going to we're going to depreciate it with one method we're going to use the
straight line method in the video after that we're going to appreciate this
pizza truck that cost us five thousand we're going to use in five years and yes
very useful as privateers and then we're going to do one message the double
declining balance method so we're going to do the two different mistahs same
same specifications wherever samuel across useful life residual value for
both the straight line and the double declining balance and eventually
eventually the whole all of the depreciation will be all of the five
thousand dollars will be used up in depreciation and it's just going to
happen at different times the straight line is going to happen you know a
certain amount every year certain right every year the double declining realms
is going to be a higher amount at first in the lower amount at first so then you
say so you're going to start thinking here why and this is like the fun of
taxes and accounting for me and because i get to the ik save people money
realize people real money and who don't like them chippers boy why would you
let's see why would you not want more expense this year why would you not want
to take all the more depreciation this year more depreciation this year less
depreciation next year so maybe i don't have to pay as much tax this year
because I'm not making as much money because a lot of new startup businesses
don't make a lot of money like I am a startup business two years in so I'm not
making a lot of money a lot of profits I don't have to pay a lot of tax now so I
don't need that extra depreciation expense now so I want it slow I don't
want to take all my depreciation expense now because even without it I don't
really have to pay any taxes because I'm not only making any money so I'm saving
that depreciation for maybe three four five years down the road where I am
making more money hopefully bless bless up when I'm making more money and now I
have to owe taxes but I but now I have more depreciation expense and I'm more
expensive so I pay less taxes was that a mouthful oMG I love doing this whoo
well let's just stay positive stay grinding have fun be blessed let's love
this life you want to get one let's enjoy it come on let's go I hope to see
you in the next one hope to see you in 62 deuces