That’s good news!

Capitalizing and depreciating (or amortizing) major purchases allows you to spread out expense over estimated useful life. When you buy a new asset, you have no way of knowing how it will perform. You might find yourself discarding some purchases early – and you might own others for longer than you had expected.

If you wind up using your asset after it has been fully depreciated, then those extra years of useful life get a “free ride,” from the viewpoint of expense.

Remember, the function of depreciation is to spread the purchase price over an estimated time span. Once the original cost has been fully expensed, that’s it!

It’s important to make sure that you are depreciating your capital assets over a reasonable time frame. Be sure to discuss capitalization and depreciation policies with your accountant, to confirm that you’re following methods that work for your organization and its belongings.