E.O.W(End of the Week) Notable Tip: Return on Assets

Happy Friday!

I hope you’ve had a great week.

Today, I would like to discuss return on assets. Effective companies utilize their assets wisely by ensuring for example that low margins are supported by an equally low asset density coupled with the ability to remove waste and inefficiencies from processes. Continuous investment in assets and continuous improvement of processes yields better operating asset efficiency and is good for shareholders as well. Asset depreciation with a stagnant revenue stream is not good for shareholders as the net-to-gross ratio tends to decline as assets age without the appropriate replacements or investments being made.

I hope you’ve enjoyed this E.O.W and as always, “Success is continuous improvement.”




Taxes: Depreciation Categories

When buying assets it is important to know the best way to purchase and depreciate to take advantage of tax loopholes. Capital expenses usually include the following assets: buildings, cell phones, computers and software, copyrights and patents, equipment, improvements to business property, inventory, office furnishings and decorations, small tools and equipment, vehicles and window coverings. Below you will find a more detailed account of these depreciation categories.

3 year property:

  • plastics
  • metal fabrication
  • glass


5 year property:

  • cars
  • trucks
  • small planes
  • trailers
  • computers
  • peripherals
  • copiers
  • calculators
  • manufacturing equipment (for apparel)
  • construction activity assets
  • R&D equipment


7 year property:

  • office furniture
  • manufacturing equipment
  • fixtures
  • oil
  • gas
  • mining assets
  • agricultural structures
  • personal property

Commercial buildings can be depreciated over 39 years while residential rental real estate can only be depreciated over 27.5 years. Expenses incurred for improvements to sidewalks, roads, drainage facilities, fences and landscaping are depreciated over 20 years.

To learn more about Notable Bookkeeping’s tax planning, preparation and research services call us today at 201-937-3428.

Lean Wednesday Tip: Maxing out Asset Depreciation Deductions

“If you max out asset depreciation deductions and have written it off 100%, it is best to donate it to reduce income taxes.”


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