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Intuit

How do I record the depreciation of an asset?

In the course of running and growing your business, you may need to get a loan to buy new assets. Vehicles, equipment, machinery, buildings, and other assets used for business gradually lose value over time. This decrease in value is known as depreciation.

In QuickBooks Online, you can easily record the loans, assets bought with the loans, loan payments, and depreciation of the assets.

How do I set up an asset?
How do I record the loan for an asset?
How do I enter the loan payment for an asset?
How do I record the depreciation of an asset?

QuickBooks Online does not automatically depreciate fixed assets. Instead, you need to  manually   track depreciation using journal entries. U.S. customers may want to consult the IRS publication on the topic of depreciation if you're going to try this yourself: http://www.irs.gov/publications/p946/index.html.

We also recommend working with your accountant if you're entering depreciation for the first time.

Note: You can make this process more automated by setting up specific journal entries on a timed schedule using the Recurring Transactions feature.

 

To depreciate an asset:

First, create a depreciation expense account (if you haven’t already):

  1. Select Gear Icon at the top.
  2. Under Your Company, select Accounts and Settings (or Company Settings).
  3. On the top right, select New.
  4. Select Other expense and choose Next.
  5. Select Depreciation and choose Next.
  6. Create the account name, such as Asset Loan Depreciation Expense, and select Finish.

At the end of the year when you or your accountant have calculated the depreciation amount, enter the transaction:

  1. Select Create (+) at the top, then Journal Entry.
  2. In the first line:
    • For Account, select your depreciation expense account.
    • Under Debit, list the amount of the depreciation.
  3. On the second line:
    • For Account, select the asset account you are Depreciating.
    • Under Credit, list the amount of depreciation.