How to Set Up, Record & Calculate Depreciation in QuickBooks Desktop & Online?

Depreciation is a type of accounting that is used to give assets a real cost. Assets may be tangible or […]

Depreciation is a type of accounting that is used to give assets a real cost. Assets may be tangible or physical, and their costs are assigned over the time period it would be useful. With the help of this method, you can know the reduction that has been made in the cost of the asset. This approach can be slightly different from accumulated depreciation. As it is clear by its name, it states the cumulative depreciation of an asset until a certain time. Learn How to Set Up, Record & Calculate Depreciation in QuickBooks Desktop & Online.

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A user must create an account to handle the QuickBooks depreciation accounting. The Chart of Accounts tab is a standard component of most QuickBooks versions. For all processes including accounts, this tab is helpful. You can also create your depreciation account by using it. You can start tracking the depreciation once you’ve set it up. Once the recording or entry is finished, you can calculate it.

What is QuickBooks Depreciation Account?

The account is a Fixed Asset Account, Which is purchased for the long-term. Individuals and businesses can use such assets for as long as they want. However, the value of the asset decreases with time and level of usage. It is different from accumulated depreciation, which belongs to the contra account type, which is set up for reducing the value of the related account. For example, it reduces the cost of the fixed asset items on the balance sheet.

Why Set Up & Record Depreciation in QuickBooks?

Accounting depreciation in QuickBooks involves a series of steps, which when followed makes setting up, recording, and calculating the same easier and less time-consuming. Users need to create an account. They have a common Chart of Accounts tab that almost all versions of QuickBooks make available. This tab helps in setting up different accounts, including the one for depreciation.

As soon as the account is set up, the next step is to record the depreciation. After the data and figures are recorded, users can do the required calculations to proceed with the accounting-based decision-making.

How to Set Up Depreciation in QuickBooks?

There are different methods of setting up a depreciation account based on the type and nature of depreciation details to be recorded.

Method 1: For Setting Up New Account

Users can modify QuickBooks Depreciation by clicking the Chart of Accounts option. After tapping on the Gear sign that is present on QuickBooks homepage, this option can be found. Next, you must select the new button. Selecting the Next option after choosing the Depreciation tab is necessary.

If you are a new user trying to set up a depreciation account in QuickBooks, The following steps will help you do that using the Chart of Accounts:

  • Run the “QuickBooks” Software.
  • Click on “Gear” icon. On the settings that appear.
  • Click on “Chart of Accounts“.
  • Click on “New” in the Forth steps.
  • Choose the “Depreciation“.
  • Now choose the “Next” option.
  • A dialog box appears for users to enter the Depreciation Account name. Type in the name.
  • Click on the “Finish” button in this instruction.

Your depreciation accounts gets set up.

Method 2: Setting Up Fixed Assets Depreciation in QuickBooks

In QuickBooks, the assets that are fixed can be depreciated. You must open a fixed asset account before you may depreciate your assets. On the QuickBooks window, select the Gear option. Next press the COA tab, which stands for Chart of Accounts. From here, select New and search for the pull-down for Account Type. Select the Other Expense option from this menu.

If you are looking forward to setting up a fixed asset depreciation in QuickBooks, the following steps can help you:

  • In the accounting software, click the “Gear” sign.
  • Next, select “Chart of Accounts“.
  • Then tap on the “New” option
  • Select “Other Expense” under the “Account Type” from the drop-down menu.
  • Then select the “Depreciation” from the drop-down menu for Detail Type.
  • Mention the account’s name next.
  • Lastly, Click “Save and Close“.

The accounts get set up.

Method 3: Set Up QuickBooks Online Manually

You can manually set up a depreciation account in QuickBooks Online for setting any preferences or customizations. Select the Chart of Accounts button under the software’s Settings button. It is necessary to select New. Select the Other Expense tab from the Account Type drop-down menu that is now available. You need to choose the Depreciation feature among the options in the Detail Type pull-down.

Know how to set up depreciation in QuickBooks online in the below points:

  • Firstly, launch the “QuickBooks Online” software.
  • Then click on the “Settings” and then press the “Gear” like button.
  • After that choose the “Chart of Accounts” tab.
  • Then click the option of “New“.
  • Now, view the drop-down menu of “Account Type“.
  • Choose the option of “the Other Expense“.
  • After that choose “Depreciation” from the drop-down option of “Detail Type“.
  • Then choose the name for the account such as “Asset Depreciation“.
  • Lastly, click on the “Save and Close” option.

Pressing this button will start the Software’s Asset Setup, Which will take some time to finish. Then you are free to customize the manual method as you want. You can then use QuickBooks Online to Enter, Track, or Upload Depreciation.

How Do I Record Depreciation in QuickBooks?

You might want to begin recording the details in the depreciation account once it has been set up in the QuickBooks software. Clicking the Lists button will do this. You must find and select the Chart of Accounts option if you are using the QBDT software on a Mac. Other than this, QuickBooks Online gives customers the option to enter or record depreciation using the Journal Entry menu.

Continue reading if you want to learn the several ways to record depreciation expenses in QuickBooks or other similar features in the versions.

Method 1: Using Lists to Record Depreciation in QuickBooks

The Lists tab must be used in order to record depreciation in QuickBooks. The software’s main window contains a button for this option. Tap on the Chart of Accounts menu after clicking it. Then, for entering depreciation in QuickBooks, Click twice on the sub-account that is used to track the accumulated depreciation. Additionally, the depreciation amount needs to be entered.

If you want to record depreciation in QuickBooks, you can follow the below-mentioned steps:

  • Go to “QuickBooks” and Log in.
  • Choose the “Lists” options from the Menu Bar.
  • Click on “Charts of Accounts“.
  • Click on the Sub-account twice. This helps monitor the Accumulated Depreciation Account you want to convert into a Depreciated one.
  • Specify the Depreciation Amount for Recording a Transaction.
  • Choose the “Account” option.
  • Type in the Expense Account to be Tracked for Depreciation.
  • Click “Save“.

Method 2: Using Lists to Record Depreciation in Mac QuickBooks Desktop Version

Through the Chart of Accounts option, Mac users of QBDT can benefit from the advantages of recording depreciation in their application. You must click the Lists button to go to this tab. Click the COA button after finding it. Then decide which sub-account you’ll use to keep track of the accumulated depreciation. Click on Use Register in the Action drop-down menu.

If you are a Mac user, follow the steps mentioned below to record the depreciation in QuickBooks:

  • Open a window labelled “QuickBooks Desktop for Mac“.
  • Tap on the “Lists” option.
  • Click on “Chart of Accounts“.
  • The Sub-account to be tracked for Depreciation should be chosen.
  • Click the “Action” Dropdown.
  • Click on “Use Register“.
  • Enter the Depreciation Amount as a Decrease.
  • Go to the “Account” field.
  • Fill up the Expense Account to be Tracked for Depreciation.

Method 3: Recording in QuickBooks Online Manually

Users have the option to manually register assets for depreciation in QuickBooks Online by using the Journal Entry option. When you click the +New button, this tab will appear. You must tap on it to go to the first line of the Account drop-down menu. Select the asset account where the loan is tracked from here.

With the help of the below points you will be able to describe how to depreciate assets in QuickBooks:

  • Visit the Accounting Software (QuickBooks).
  • Then click on the “+New” and after that click on “Journal Entry“.
  • Select the Asset “Account” that is used to track the loan that is in the first line of the Account Pull-Down.
  • Put the Depreciated Amount in the column of “Credits“.
  • Move on to the Second line and Select the QuickBooks Depreciation Account you created from the “Account” drop-down menu.
  • Type the Matching Depreciation Amount in the Debits Column.
  • After that, Click “Save“.

How to Calculate Depreciation in QuickBooks?

As soon as the data is recorded for the required tracking of an account for depreciation, the next step is to calculate the depreciation. The steps to follow are mentioned above:

  • Specify the details related to the Fixed Assets in question.
  • Go for Automatic Calculation. It could be done using either of the following methods:
    • Straight-Line
    • Sum of the Years Digits
    • Double Declining Balance
  • Choose the method that best serves your requirements.
  • Save the details of each asset once the calculation is done for them.

In the QuickBooks Desktop Know How to Record Accumulated Depreciation?

In order to determine an asset’s net book value, you must concentrate on its accumulated depreciation. Its account setting becomes crucial for this. For each asset you plan to depreciate, you can start the setup process by opening a new fixed asset account. Additionally, you must add up two sub-accounts for each of the accounts you have created for fixed assets.

Follow the steps listed below to learn how to enter accumulated depreciation in QuickBooks Desktop:

  • In QuickBooks, A New Fixed Asset Account needs to be created.
  • Create an Account for each Asset that is to be Depreciated.
  • It is also Necessary to add two Sub-accounts.
  • For each New Fixed Asset Account, You create, be careful to Add the sub-accounts.
  • Now, An Expense Report must be created.
  • The Account might be called “Depreciation Expense.” It will be made to keep Track of Depreciation Expenses.

Users can configure depreciation in QuickBooks in a number of ways. You learned how to set up these approaches from this blog. Depreciation can be crucial to enter for a number of accounting-related reasons. Methods to enter were also shared in this blog. You can now calculate it and finish up the accounting operations for your company. If still, you are facing any issue then you call the help desk as they are available round the clock for the users.

The steps above have been clearly stated. However, there might be instances where users can get stuck in carrying out the steps. We completely understand your issues and hence we make our professionals available for instant guidance and assistance.

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Frequently Asked Questions (Faqs)

How to Set up Depreciation in QuickBooks Online Manually?

If you want to set up the depreciation account in QuickBooks Online manually, here are the steps to follow:

● Open QuickBooks Online, Choose Settings.
Tap the Gear icon and Choose the Chart of Accounts tab.
● Click on New & Go to the Account Type dropdown after that Select the Other Expense option.
● Click the Detail type dropdown, Choose Depreciation.
● Give a name to the Account.
Click on Save and Close.

How do You Record Depreciation in QuickBooks Online Manually?

If you are looking forward to recording depreciation in QuickBooks Online manually, the steps are given below:

● By going to the Settings choose Chart of accounts
● After that select New
● Select other Expenses from the savings account under the dropdown option
● After that, select Depreciation from the Tax form section from the drop-down menu
● Then give the name a name such as an Asset depreciation
● After that select Save

How do You Record Depreciation? What kind of Transaction do you Create?

Debiting the Depreciation Expense account (which appears in the income statement) and crediting the Accumulated Depreciation account is the fundamental journal entry for depreciation (which appears in the balance sheet as a contra account that reduces the number of fixed assets).

Does QuickBooks have a Depreciation Module?

With the help of the Fixed Asset Manager (FAM) feature in QuickBooks Desktop, fixed assets can be depreciated according to IRS-approved standards. To assist you in better managing your asset information, here are the terms, depreciation techniques, and predefined reports in Fixed Asset Manager.

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