Depreciation is allowed as a direct cost of gambling.  The Department encourages all clubs to draw a cash equivalent of the depreciation by cheque from the gaming account and pay it into a separate reserve bank account within the club accounts.

This ca be done monthly.  These funds can then be used for upgrading gaming machines, buying new ones and paying off loans.  Losses on sale can also be transferred at the end of the year.

Using this system will make it easy at licence renewal time to reconcile undistributed funds with the gambling bank account.

Gaming Machines are a club asset and the reserve account finances gambling equipment, not the gambling operation.  If this account does not have enough money the club's funds should be used.

In depreciation guidelines carried in the March 2007 issue of Gambits the Department said "diminishing value" is the preferred method for determining depreciation on gaming machines and new gaming machines should be depreciated over a period of no more than three to five years.

(SOURCE: Department of Internal Affairs, Page 8, Gambits December Issue)