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Thread: Optical display fixtures and depreciation

  1. #1
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    Optical display fixtures and depreciation

    At what rate do you think optical displays and fixtures depreciate? For example, if were to buy $20,000 in displays, dispensing tables, chairs etc.. How much can I expect to get in 5 years?

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    There is the accounting question first, but I don't think you are talking about that. If the displays were custom made, and in good condition, new when purchased, they are worth only what someone will pay for them, probably about 20% of what they were new. But it depends on how transferable they were to another practice or such, if they were modular or full custom and won't fit anywhere else. If they were modular and in perfect condition they might fetch a little more.

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    The accounting that sharpstick777 is alluding to is critical only to the seller. Your accountant will give you the formula for depreciation and deduction of all leasehold improvements, furniture and fixtures, and equipment, which, depending on the tax laws of your country, might or might not be straight percentage depreciated annually.

    The rate of depreciation, might be different for the items listed in the previous sentence. The cost sold, therefore, will generate a "gain" which(even in a loss year) could trigger taxation in some situations, so "book value" is often referred to as a/the value of the object.

    The buyer, on the other hand, has to purchase, move, install, maintain said object. All that before depreciation, so the life value of the object becomes a question. Will I be able to keep it until I depreciate it completely? What will it's resale value be in 2,5,10 years? Displays are separately treated as leasehold improvements, while fitting tables, chairs are furniture and fixtures, and are not equipment. In my country the depreciation rate is different for each item. Some items are small in value and can be depreciated when bought(immediate).
    Last edited by uncut; 07-11-2012 at 07:35 PM. Reason: spelling and meaning........doooh!
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    Accounting questions aside, uncut is correct. It's value is what the buyer is will to pay.

    Now, if this is a strictly accounting question, I strongly suggest you talk to your accountant. Tax law varies from state to state, but they usually fall back on the IRS rulings. Furniture and Fixtures are "generally" given a 5 to 7 year life, and depreciated accordingly. However, you can (with consultations with your accountant) choose an alternate type of depreciation and an alternate life time. Again, I strongly suggest that you discuss the tax implications with your accountant.

    Typically, depreciation is calculated on the purchase price (which usually includes installation charges) less a value for "scrap" (at the end of its life), over a fixed period of years. When you sell the item, the value you receive is charged against any remaining depreciation and the "scrap" value. If the value received is greater, you have a "gain on sale of assets", if it is less, you have a "loss on sale of assets". Again, these are things your accountant can tell you.

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    I looked at a complete office full of Mode (gag!) displays this afternoon. 10 units, plus two receptions, plus tons of glass shelving. Approximately 12 years old. He paid $60k, was asking $7k, and I probably wouldn't have taken them if he gave them to me for free. (Forget the "probably" I won't take them)

    For tax purposes, follow your accountant's advice. For selling/purchasing, listen to Sharpstick and others. They are only worth what someone is willing to give you, and if you're selling, it's usually a lot less than you expect. (A good example of this can be found in the Marketplace forum)
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    My accountant once told me that fictures and machines are like cars, they drop 20% in value the minute you drive them off the lot! My guess would be you might get about $10,000.00
    "Coimhéad fearg fhear na foighde"

  7. #7
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    Quote Originally Posted by EyeManFla View Post
    My guess would be you might get about $10,000.00
    My guess would be you might ASK about $10,000.00
    Ophthalmic Optician, Society to Advance Opticianry

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    Quote Originally Posted by sharpstick777 View Post
    There is the accounting question first, but I don't think you are talking about that. If the displays were custom made, and in good condition, new when purchased, they are worth only what someone will pay for them, probably about 20% of what they were new. But it depends on how transferable they were to another practice or such, if they were modular or full custom and won't fit anywhere else. If they were modular and in perfect condition they might fetch a little more.
    I agree. 5 years is quite a bit of abuse, especially with desks. Nothing in the optical is worth much on a stand alone basis, not even frame inventory. Its all pretty much worthless to 99% of the population. Your timing would need to be spot on, someone in the area would need to be opening an optical, otherwise they probably are not going to need most of your stuff anyway. If you have a few years to sell it, you may finally be able to command a decent price, but otherwise you're going to need to offer a pretty good price to move it quickly.

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