business loan question?

[finalpsychyear]

If you take out a loan for a medical equipment which costs for example 50k but you only pay 1k a month in the loan with interest included over 4 years. When you are calculating the cost vs profit for your business are you going year by year for the cost you put toward the machine or total cost of the machine?

Simply put if your medical equipment made you 50k in year 1 did you technically make a profit since you paid 12 k to the bank which includes interest or did you simply just break even since that is what it truly costs?

I always wondered if these calculations are done yearly for a business or if a true cost value is how it is looked at.

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[WisNeuro]

I don't know medical equipment specifically, but at least in the realm of real estate, equipment that you buy for your business (rental property) is depreciated over time depending on the calculated "useful life" of the equipment, a certain percentage based on year. I assume the IRS may have a table as this relates to healthcare businesses.

A Brief Overview of Depreciation | Internal Revenue Service

to start

 

[finalpsychyear]

I don't know medical equipment specifically, but at least in the realm of real estate, equipment that you buy for your business (rental property) is depreciated over time depending on the calculated "useful life" of the equipment, a certain percentage based on year. I assume the IRS may have a table as this relates to healthcare businesses.

A Brief Overview of Depreciation | Internal Revenue Service

to start

I don't know much about this topic but i believe they have changed this rule slightly that for the next few years you can write off certain medical things in their entirety? I am using the irs link below.
Section 179 Tax Deduction for 2019 | Section179.Org

Provided if the above is true and you are able to deduct the entire 50k in year 1 but make 50k from the device while only paying 12k to the bank for loan did you make a 38k profit or did you break even since your device true cost with your profit is now 0?

 

[michaelrack]

Your profit for accounting purposes will be different than from IRS purposes.

 

[finalpsychyear]

Your profit for accounting purposes will be different than from IRS purposes.

Correct. For accounting purposes the cost to the business would just be the monthly payments for the device for an entire year minus what the machine generated in that given year. So if I paid 10k to the bank in a given year and generate 50k it would be considered a 40k profit for acct terms?

as an aside: most businesses that finance equipment use the "monthly" payments for the year as the "cost" of the machine not the actual cost for a given year when they try to decide if they are making a profit?