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Set up asset accounts to track depreciation

If your accountant uses the QuickBooks Fixed Asset Manager and you track your fixed assets with fixed asset items, ask your accountant for more information about how to set up fixed asset accounts.

  1. Create a fixed asset account for each asset (or group of assets) that you want to depreciate. For example, you might create a fixed asset account called Vehicles, or Computers.

    How to set up the accounts

    What if my accounts are set up differently?

    There are several "correct" ways to set up accounts for fixed assets and depreciation. This topic outlines one method. If you have been using a different method, you can continue your current practice in QuickBooks.

  2. Add two subaccounts to each asset account that you created. One subaccount tracks the cost of the asset, the other tracks accumulated depreciation.

    How to set up the subaccounts

    When you create the subaccounts, 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; for example:



         Accumulated Depreciation

    • For the Cost subaccount, enter the original cost of the asset in the Opening Balance field. Enter the date that 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. Finally, create an expense account to track depreciation expense. Give the account a name such as Depreciation Expense.

See also

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