When depreciation begins

Depreciation (the process of deducting the purchase price of a fixed asset over several accounting periods) begins during the month or year that you start using an asset productively in your business. You cannot record a depreciation expense for an asset that has been purchased but not yet used. For instance, if you are waiting for delivery of a prepaid computer, you cannot begin recording depreciation expenses until you actually start using it. The date on which you begin using a fixed asset in your business is known as the "placed-in-service" date. This date is required in order to figure the correct depreciation expense.