How to Set Fixed Assets to Track Depreciation in QuickBooks Desktop for Mac?

Let’s learn how to set fixed assets to track depreciation in QuickBooks desktop for Mac.

There are some ways to track fixed assets and depreciation.

What are Assets?

The resources with economic value which is owns or control with the expectation that it will provide future benefits to all individual corporation or country is known as assets. Assets are reported on company’s balance sheet. It is bought or created to increase the benefits and value of firm operation. Assets is something that generate cash flow, improve sales, reduce expenses regardless of manufacturing equipment or patent. Company assets are the things which your company owns. There are two types of assets:

• Current Assets: The assets which you want to convert within a year is known as current assets. Current assets include cash in hand, cash in your money and saving accounts, and the money which was given by the customers to the company.
• Fixed Assets: At the time of normal operations, you don’t expect that your assets will convert to cash in one year those types of assets are known as fixed assets. Fixed assets are very important for the operations for the business-like computers, registers, cabs, trucks etc.

About Depreciation and Accumulated Depreciation in QuickBooks

The decline value of the physical assets is known as depreciation whereas the cumulative depreciation of the assets up to single point in life is known as accumulated depreciation.

Depreciation

The cost of using tangible assets with the benefit gained over its useful life is known as depreciation. There are types of depreciation like straight line etc. The sum of all depreciation which are recorded as assets to a specific date. All the accumulated depreciation are minus from the value of assets. After all depreciation the assets value is refer as salvage value.

Rules of the depreciation

There are no rules that how quickly and exactly you must depreciate your tangible asset. Following are the some important rules of the depreciation:

• Plant and Machinery
• Fittings and Fixtures
• Furniture
• Motor Vehicles
• Equipment and computers

Accumulated Deprecation

Accumulated Deprecation is also known as Contra Assets Account. It is a natural balance which is credit that reduces overall asset value. The carrying value is the net of assets account and accumulated depreciation.

The value that remains on balance sheet after which all its deprecation which is accounted until the asset is disposed or sold. This type of value is known as salvage value.

It totally based on the expectation of the company that what the company receive in exchange of assets. The assets estimated salvage value which is a important component in the calculation of depreciation.

Type of Asset Which can be Depreciate

The types of assets which can be depreciated it depends on the IRS set guidelines. It must need to meet following criteria:

• You own it.
• You use it in order to produce income.
• You can determine its useful life.
• You expect it to last more than one year.

Some of the examples of assets depreciated by the small business include:

• Vehicles
• Real Estate
• Equipment
• Office Furniture
• Computers

Depreciation Schedule

The table which shows that how much your assets will be depreciated over the year is known as depreciation schedule. It includes the following information:

• Asset Description
• Purchase date
• Price for the asset that you paid
• Expected Useful life
• Method use for depreciation.
• Salvage Value
• Amount which is deductible in the current year i.e depreciation amount.
• The cumulative depreciation amounts.
• The net book value of the assets.

What are the Depreciation Methods in QuickBooks

The following are the depreciation method which company use in order to depreciate assets:

• Straight-Line: It is the common method of depreciation in which the value of fixed asset is reduce over the useful life.
• Declining Balance: It can be defined as accelerated depreciation system of recording the larger depreciation expense during the earlier year of an assets of useful life and recording of smaller depreciation expense during the asset later year.
• Double-declining Balance: It is an accelerated depreciation method which count an expense more rapidly.
• Units of Production: The method of calculating the depreciation of the value of an asset over a time is known as unit of production.
• Sum-of-years Digits: It is the accelerated method of determining an asset expected depreciation over a time.

Setting up of Asset Account to Track Deprecation in QuickBooks

Follow the following steps in order to setting up of assets in order to track deprecation.

• First you have to create a fixed asset account for all the assets which you want to depreciate. The account can represent single assets or group of related assets.
  • The type of account is the fixed assets.
  • Now you have to give name to each account which indicates for which assets the account is. The name of the account which is useful in its tracking. For example, truck, office, furniture, and computer.
  • Leave the opening balance at 0.00.
• Add two subaccounts for each of the asset’s account which you created. The two-account track the assets differently. One of the subaccounts tracks the cost of assets and the other one tracks the accumulated depreciation.
  • Every main account has two sub accounts.
  • You can name the account in following manner:
    • First subaccount can name as cost.
    • Second subaccount can be name as accumulated depreciation.
  • In the case of subaccount, you have to enter the original cost of the assets in the opening balance field. You have to enter the date of the purchasing of asset.
  • In the case of Accumulated depreciation, you have to type 0.00 in the opening balance in case if you have assets after QuickBooks start date. In case if you have assets before the start date then you have to enter the accumulative deprecation of the assets AS OF the start date. You have to enter this amount as a negative number.
• In order to track depreciation of the assets you have to create expense account. You can give name to the account is depreciation expense.

How to Enter the Depreciation in QuickBooks

It is the difficult process to determine the amount of depreciation. Following are some steps in order to figuring the actual depreciation amounts.

• First you have to go to the list option in QuickBooks.
• From the drop-down menu of list you can select the Chart of Accounts.
• Now you have to select the subaccounts that will track accumulated depreciation for the asset you are depreciating.
• Click on the action pop up menu and from the drop-down menu of pop-up you have to select use register option.
  • Now in the bottom of register you have to enter the transaction. There are two steps for it:
  • You have to enter the depreciation amount as decrease in register.
  • Enter the expense account which you set up to track depreciation in the account field.

Now you came to know that assets and depreciation does not need to be complicate. You just have to record exactly what you have purchased. You have to work with the accountant in order to understand the useful life of the item. Now you can apply proper depreciation values while preparing your accounts.

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