Hardware: Keeping Track of Hardware
Most electronic equipment -- for example, computers, fax machines, and telephones -- has a five-year life on depreciation schedules. After that, it's considered worthless. Although keeping track of small equipment can be a chore -- it's a lot harder to track a phone than a truck -- it pays off at tax time.
Accountants advise tracking individual pieces of equipment from the day they're purchased. Why? Well, suppose that a company buys 10 PCs at different times over the years and that 3 of them are tossed for upgrades. If the company hasn't tracked the individual machines, it may not get the full value of the depreciation on the 3 machines.
A tracking system also pays off when a machine disappears. A company that takes inventory regularly will (1) realize a laptop is missing and (2) be able to deduct its undepreciated value.