Old Fixed Assets Write-Off
- Enter number of years over which old fixed assets can be depreciated.
- In Stock purchase, this number is likely to be different than the new fixed assets depreciation life.
Old fixed assets i.e. the fixed assets acquired as part of the acquisition are written off on a straight-line basis over the number of years specified in this cell. permit accelerated or custom depreciation schedule. (See for depreciation of new fixed assets.)
Depreciation life of the old fixed assets and the new fixed assets can be different. This can be especially true in a Stock purchase, where the remaining depreciation life of the old fixed assets may be shorter than that for the new fixed assets.
Most businesses have fixed assets with different depreciation lives. In such situations one should use the average, or the weighted average, depreciation life for all the old fixed assets.
Longer depreciation life means tax benefits of depreciation are spread over a longer period of time. Hence businesses with long-life assets will have a lower value, all other things being equal. The opposite is true for businesses with short-life assets; they will have a higher value, all other things being equal.