Chapter 10: Property Acquisition and Cost Recovery

Chapter 10: Property Acquisition and Cost Recovery

1. Depreciation

   • Method of deducting the cost of tangible personal and real property (other than land) over time
     • Personal property: automobiles, equipment, machinery
       • Real property: buildings and land

2. Amortization

   • Method of deducting the cost of intangible assets over time
     • Intangible assets: goodwill and patents

3. Depletion

   • Method of deducting the cost of natural resources over time
     • Natural resources: oil, coal, timber, gold

4. Adjusted basis

   • Subtract the accumulated depreciation (or amortization or depletion) from the asset's initial or historical basis