How to Track Depreciation with QuickBooks Asset Accounts

Posted by on Jul 19, 2011 in Other Accounts | 4 comments

I am not going to delve into the accounting side of depreciation, but I will show you how to track it. The depreciation that I am speaking of has to do with Fixed Assets.

The rule of thumb that I use to capitalize fixed assets, are those priced above $500 and the type of asset it is – otherwise I would expense it. These days assets such as computers are depreciated 45% in the first year, and then that percentage is used yearly until the original value is zero. So just about half of the value is written off in the first year.

Since computers evolve so quickly these days, I would consider writing them off completely after three years, as there really is little, if any, value remaining after that.

First I need to set up the accounts to work with. Since I have been speaking about computers, and most companies have one or more, I will use computers for the example.

To set up this account I will click on the Menu Bar/Lists/Chart of Accounts, right click on my mouse and choose New. From there I will click on the button besides Fixed Assets (major purchases), then Continue, proceed to type in Computer Equipment in the Account Name field and Save & Close.

When I am finished the new accounts and their amounts will look like the screen shot above.

I need to set up two more Fixed Asset Type subaccounts and those would be one for the asset’s Cost and the other for Accum. Deprec. (accumulated depreciation). The 7,112.20 that was paid for the new computers, is reflected in the Cost subaccount.

When I am finished the new accounts and their amounts will look like the screen shot above. Now to recognize the accumulated depreciation (Balance Sheet) and the depreciation expense (Profit & Loss).

At the time of this writing I am using CRA’s Class 45 (Classes of depreciable properties) for the Capital Cost Allowance percentage (45%). To arrive at the monthly figure, I will multiply the cost (7,112.20) times 45% which equals 3,200.49. I then divided that by 12 to obtain my monthly accumulated depreciation amount of 266.71 (rounded up).

Now it’s time for me to set up the general journal and memorize it.

To create a general journal I go to Menu Bar/Company/Make General Journal Entries and enter in the information that is shown on the right. Since I want to use this entry for a fiscal year, I will memorize it BEFORE  – I Save & Close.

To do that I will go to Menu Bar/Edit and Memorize General Journal.

In the Name field I will key in Computer Deprec., click on the Automatically Enter button, choose Monthly from the drop-down box, change the Next Date to 01/31/2009,  key in 10 in the Number Remaining field and finish by clicking on OK.

This will take me back to the Make General Journal Entries window where I will Save & Close.

The memorized accumulated depreciation journal entry (that’s a mouth full) will post every month until the end of the fiscal year, and will subsequently reduce the value of the Computer Equipment in doing so. The other side of the entry recognizes the Depreciation expense, found on the Profit & Loss Statement. is now mobile friendly. From the web address you can choose Options/Mobile formatted and the site will appear in all its living colour for you to view. Check it out.

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4 Responses to “How to Track Depreciation with QuickBooks Asset Accounts”

  1. I have followed your instructions, and they work in the chart of accounts. However, I cannot get the accumulated depreciated to appear in the column “Accumulated Depreciation” on the listing of “Fixed Asset Item List” (Menu Bar>Lists>Fixed Asset Item List. Yes…I set up the “computer” as a fixed asset item. On the Fixed Asset Item List, I can see the computer, the date it was “purchased”, the cost, the description, the account name; BUT the field for accumulated depreciation is BLANK!! Going back to the Chart of Accounts, I can double-click on the accumulated depreciation account and see the register, which clearly shows the transactions recording the depreciations. How can I get the accumulated depreciation to appear on the Fixed Asset Item List???

    • This is a hard one because I can’t see what you have done DM. Okay, you’ve set up a “Cost” account for the Computer right? And a separate Accumulated Depreciation account – right? Because if that is correct, and those two accounts are Fixed Asset accounts, not Other Asset or Other Current Asset, then you should be able to see that account in the Fixed Asset Item List.
      Let me know how you set those up.

  2. I forgot to tell you I am using QuickBooks Pro 2015. Is that the problem? In other words, do I need to upgrade to QuickBooks Enterprise Solutions (it has the Fixed Asset Manager) in order to see the column “Accumulated Depreciation” filled in with data? There should be a way within QB Pro to do this!

    • No QB’s Pro 2015 is not the problem nor do you need to upgrade to Enterprise. See my reply to your first comment.I just set one up in QB Pro, so I know it works with a SEPARATE Accum. Deprec. acct.

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