or another piece of equipment
for your business it needs to be
classified as an asset as opposed
to an expense. An asset needs to be
"expensed" over a period of time,
in this case 3 years. This asset will sit on your
Balance sheet for 3 years until it is fully
Looking at a couple similar scenarios, may help:
Scenario 1: You buy a computer for $3000. You will record the computer as an asset and record an expense of $1000 per year for 3 years.
Scenario 2: You buy a computer for $2100, you will record the entire $2100 as "Computer Expense" at the time of purchase.