QuickBooks is a very helpful accounting software which helps its users in a myriad of ways. It is one of the robust solution to efficiently maintain the business deals online. All forms of financial information which encircles the capital assets, profits, borrowings, and the list goes on are absolutely recorded in QuickBooks.
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Quick Introduction to Depreciation in Simple Words:
Depreciation is referred as an accounting procedure of assigning the expenses of tangible assets. An exact amount of assets share reclassifies to an expense account. Its expenses do not impact the cash.
Here are a few facts given below about the Depreciation:
- Useful Life: It refers as the number of years for which a business will use the asset.
- Salvage Value: Dollar amount the business can sell the asset towards the end of its useful life.
- Depreciable Base: The holistic expense that devalue the asset’s helpful life. In such scenario, you are required to evaluate the depreciable base by subtracting the expense of the assets by its rescue esteem. The equation is given below:
- Cost of the asset minus rescue esteem is equals to the depreciable base
- Depreciation Schedule: The plan properly records the dollar measure of Depreciation every year depending upon the elements recorded and the Depreciation technique.
There area swathe of depreciation strategies mentioned below:
- Units of production
- The sum of the years’ digits
- Double-Declining balance
- Modified accelerate sit recover system
Elucidating the Fixed Asset in QuickBooks Accounting Software
A fixed asset (also called a long-lived, non-current, or stock asset) in QuickBooks refers to a physical asset that is physically present and cannot be quickly converted into cash. It is a relatively permanent asset of a business used in business operations to generate revenue, unlike parts of inventory for resale. The cost of these assets are recognized in the financial statements rather than as an expense in the income statement because they are expected to be used over multiple periods. Fixed Assets would be displayed as PPandE, which stands for Fixed Assets. They are also subject to wear and tear (excluding real estate), which reduces their value over a period of time. This process is referred as damping. For this reason, companies periodically transfer part of the cost capitalized in the financial statements as an expense to the income statement.
Recording purchases as fixed assets can be bountiful for organizations with more than one reporting period. A few known examples of fixed assets are:
- Real Estate
- Vehicles Computers
- Office Machines
Asset tracking lets you track depreciation and mileage (for vehicles), equipment location and serial numbers, warranty information, and other essential data.
Fixed assets are a crucial, yet often overlooked, part of tracking your finances, managing expenses, and filing taxes efficiently by the end of the reporting period.
Here are a few assets type given below which can be added manually in the QuickBooks accounting software:
- Buildings: Facilities owned by a company;
- Furniture & Fixtures: Desk, tables, cabinets, cubicle walls;
- Improvements: This includes the amount which owner has spent to maintain the company property;
- Land: cost of purchasing the land. In addition, it is considered expenditure on improving the land;
- Long-term Office Equipment: This includes the equipment’s which life of more than one year; for examples, Tools, machinery, and equipment: equipment for work outside the office which has a useful life of more than one year.
Creating Fixed Asset Account: Process Explained
To create a fixed asset account in QuickBooks accounting software you are required to adhere to the below-mentioned steps:
- Firstly, Navigate to the Settings, and after that hit on the Chart of Accounts and select New.
- In the Account Type dropdown▼, you need to pick the Fixed Assets or Other Assets.
- Now, you are required to, Click the option that best suits your Asset from the Detail Type dropdown▼.
- Input the Account’s Name, then check mark the Track Depreciation of this asset checkbox.
- Now at this step, you are required to Enter the Starting Value of the Asset in the Original Cost field and the as of date. You also need to Leave this Blank if Recording the Loan.
- Now in the final step, you need to click Save and Close once the above steps are done.
Set up the Depreciation on Fixed Assets in QuickBooks
Yes, there are two steps to setup the depreciation on fixed assets in QuickBooks. In step one, you are required to set up a depreciation account and after that you are required to make the record the depreciation. For setting up the depreciation account you are required to adhere the below-mentioned steps:
Step 1: Confirm if You Already have a Depreciation Account
Kindly ensure that you do not have the depreciation accounting to avoid creating duplicates.
- Firstly, you are required to Navigate to the Settings and choose the Chart of Accounts.
- After that, Enter the Depreciation in the Filter by Name field.
- Now, you can skip to Step 3 if in the name Column you see an Account with Depreciation, Other Expense in the Type column, and Depreciation in the Detail Type column, then the Chart of Accounts is Set up Already.
Step 2: Set up a Depreciation Account
You are required to create an account to track depreciation if you have not already created it.
- In the first step, Navigate to Settings and choose Chart of Accounts and after that choose the option New.
- Now, select the other Expense in the Account Type ▼ dropdown.
- After that, choose the Depreciation from the Detail Type ▼ dropdown.
- Now at this point you are required to give the Account a Name, like “[Asset] depreciation”
- And in the last step, once the above-mentioned steps are done you are required to click on Save and Close.
Step 3: Record the Depreciation
Here you are required to make the record of the assets and their depreciation. At the end of the year post you have done talking to the accountant, you are now required to make a journal entry to record the lost value.
- In the first step, Select + New and after that choose the Journal entry.
- Secondly, you are required to select the Assets Account on the first line, which you use to Track the Loan from the Account dropdown▼. And after that, Enter the Depreciated Amount in the Credits column.
- Now, after that Choose the Depreciation Account you have just Created on the Second line from the Account dropdown▼ and now, Enter the Same Depreciated Amount in the Debits column.
- Once the above steps are Done choose the Save option.
In conclusion, tracking depreciation is quite easy with QuickBooks Accounting Software 2017. However, if becauseof any technical reasonyou are feeling troubled to complete the task, you can and are always welcome to take the assistance of the supportive and friendly professional experts of QuickBooks.
Hopefully, the above given information in this article is sufficient to know about the Depreciation in QuickBooks which is very beneficial for the business. If you need to know more and have any doubt in your mind then do not worry about it because Dancing Numbers experts team who is available 24*7 for the assistance via LIVE CHAT.
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What Steps needs to be Followed to Record the Fixed Asset Depreciation in QuickBooks?
To record the fixed asset depreciation in QuickBooks you are required to adhere the below-mentioned steps:
Firstly, you need to edit or add the depreciation method/Setting.
After that, open the Fixed Asset Manager.
Now, you are required to navigate to the File menu and select the “Client Information”.
In this step, you need to open the Methods tab and select the exact depreciation method for the depreciation basis.
And lastly, hit on the ok button to save the new changes.
What Steps need to be Followed to Track the Depreciation in QuickBooks?
To track the depreciation in QuickBooks you are required to adhere the below-mentioned steps:
Firstly, you are required to enter the Depreciation.
After that, open the List menu and select the “Chart of Accounts”.
Now, you are required to hit on the “Subaccount” that tracks the accumulated depreciation for that specified asset that you are depreciating.
In this step, you are required to hit on the “Use Register” from the available preferences.
Now, you need to enter the required transaction in the register field: you are required to enter the depreciation amount as a decrease value in the register.
In QuickBooks Accounting Software what kind of Account is Depreciation?
In QuickBooks Accounting Software the basic journal entry for depreciation is accessible to debit the depreciation expense account and credit the accumulated depreciation account.
What are the Steps Which need to be Followed to Create a Fixed Asset Account?
QuickBooks Accounting Software will automatically track the current value and depreciation of the asset while creating the account.
You are required to follow the below-mentioned steps:
Firstly, Navigate to the Settings, and after that click Chart of Accounts.
Now, select the New option.
In this step, you are required to pick the fixed assets or other assets from the Account.
Now, hit on the option of asset which suits you best from the Detail Type dropdown
After that, input the account’s name, then check the Track depreciation of this asset checkbox.
Now, you need to enter the starting value of the asset in the Original cost field and the as of date and leave this blank if you are recording the loan.
Now, finally you need to click on save and close option once you are done with the above steps.
What are the Steps Which needs to be Followed to Record a Fixed Asset Purchase in QuickBooks?
To make sure you have recorded the fixed asset item purchase in the books, you need to follow the instructions mentioned below:
Firstly, navigate to Banking and then write Checks.
After that, choose the Items tab.
Now, under the item column you are required to choose an empty field and click the drop-down menu.
In this step, Scroll down the item list and choose the fixed asset item(s) for this purchase.
And finally, QuickBooks will update the purchase amount in the check automatically.