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Depreciate assets in QuickBooks Online

SOLVEDby QuickBooks563Updated 2 weeks ago

In QuickBooks Online, after you set up your assets, you can record their depreciation. QuickBooks Online doesn't automatically depreciate fixed assets. Instead, you need to manually track depreciation using journal entries.

Note: Calculating asset depreciation is difficult. Your accountant knows the best methods. We recommend working with them to regularly review how you track depreciation. You should also review this article from the IRS.

Step 1: Check to see if you already have a depreciation account

To avoid creating duplicates, make sure you don’t already have a depreciation account.

  1. Go to Settings ⚙ and select Chart of accounts (Take me there).
  2. In the Filter by name field, enter “depreciation”. 
  3. If you see an account with “Depreciation” in the Name column, “Other Expense” in the Type column, and “Depreciation” in the Detail Type column, then your chart of accounts is already set up. You can skip to Step 3.

Step 2: Set up a depreciation account

If you didn’t see a depreciation account, here’s how to create one. To follow these steps, make sure you’re in Accountant view.

  1. Go to Settings ⚙ and select Chart of accounts (Take me there).
  2. Select New.
  3. From the Save account under ▼ dropdown, select Other Expenses.
  4. From the Tax form section ▼ dropdown, select Depreciation.
  5. Give the account a name, like "[Asset] depreciation]"
  6. Select Save.

Step 3: Record the depreciation

Now you have accounts to track your assets and their depreciation. At the end of the year after you've talked to your accountant, create a journal entry to record the lost value.

  1. Select + New. Then select Journal entry.
  2. On the first line, select the asset account you use to track the loan from the Account dropdown. Enter the depreciated amount in the Credits column.
  3. On the second line, select the Depreciation account you just created from the Account dropdown. Enter the same depreciated amount in the Debits column.
  4. Select Save.

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