Setting up asset accounts to track depreciation

There are several ways to track fixed assets and depreciation. The following is one suggestion.

Asset

Your company assets are the things that your company owns.

QuickBooks distinguishes between two types of assets:

To set up an asset account to track depreciation:

  1. Create a fixed asset account for each asset (or group of assets) you want to depreciate.

    The account can represent either a single asset or a group of related assets. Follow these guidelines:

    • Make the account type “Fixed Asset.”
    • Give each account a name that indicates which asset(s) it is tracking. Examples: Truck, Office Furniture, Computer.
    • Leave the opening balance at 0.00.
  2. Add two subaccounts to each asset account you created. One subaccount tracks the cost of the asset, the other tracks accumulated depreciation.

    Follow these guidelines:

    • Each “parent” account must have two subaccounts.
    • Name the first subaccount something like “Cost” and the second subaccount something like “Accumulated Depreciation.” In your chart of accounts, these names will help you distinguish the two subaccounts:

      Truck

      Cost
      Accumulated Depreciation

    • For the Cost subaccount, enter the original cost of the asset in the Opening Balance field. Enter the date you purchased the asset in the As of field.
    • For the Accumulated Depreciation subaccount, type 0.00 as the opening balance if you acquired the asset after your QuickBooks start date. If you acquired the asset before the start date, enter instead the accumulated depreciation of the asset AS OF the start date. Enter this amount as a negative number.
  3. Create an expense account to track depreciation expense. Give the account a name like “Depreciation Expense.”