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Set up an asset depreciation account in QuickBooks Online
Learn how to set up an asset depreciation account in QuickBooks Online.
After you set up your assets in QuickBooks Online, you can record their depreciation. This helps you track and understand its current value real-time. Here's how.
Notes:
Some QuickBooks Online subscription levels don't automatically depreciate fixed assets (For Example, QuickBooks Online Simple Start, QuickBooks Online Essentials, and QuickBooks Online Plus). You’ll need to manually track depreciation using journal entries for them.
The QuickBooks Online Advanced subscription level and Intuit Enterprise Suite can automatically track depreciation for fixed assets.
You may find it difficult to calculate your asset depreciation, your accountant knows the best ways to help. We recommend you meet with them often to check how you track depreciation.
You can also review this article from the IRS to learn more about depreciation and how it affects your business.
Step 1. Check if you already have your depreciation accounts
To avoid creating duplicates, make sure you don’t already have a depreciation account. You need to have both an accumulated depreciation account and a depreciation expense account. Here’s how to check if you have an existing one.
Go to All apps
, then Accounting, then Chart of accounts (Take me there).In the Filter by name or number field, enter Depreciation.
If you see the following, then your chart of account is already set up and you can skip to Step 3:
For accumulated depreciation accounts
• Name column shows Accumulated Depreciation
• Account type column shows Fixed Assets
• Detail type column shows Accumulated Depreciation
For depreciation expense accounts
• Name column shows Depreciation
• Account type column shows Other Expense
• Detail type column shows Depreciation
Step 2. Set up a depreciation account
If you didn’t find a depreciation account, here’s how to create one.
Go to All apps
, then Accounting, then Chart of accounts (Take me there).Select New account.
Add a name for your depreciation account in the Account name field.
Select the following in the ▼ dropdown from the Account type field:
Select Fixed Assets for an accumulated depreciation account.
Select Other Expenses for a depreciation expense account.
Select the following in the ▼ dropdown from the Detail type field:
Select Accumulated Depreciation for an accumulated depreciation account.
Select Depreciation for a depreciation expense account.
Note: You can enter a description in the Description field to add information about this account.
Select Save.
Step 3. Record the depreciation
If you have accounts to track your assets and their depreciation, you can now record the lost value. To do this, you can create a journal entry. Here's how:
Note: You can do this at the end of the year after you've talked to your accountant.
Select + Create. Then select Journal entry.
On the first line, select the accumulated depreciation account that you use to track the total depreciation of your fixed assets. Then enter the depreciated amount in the Credits column.
On the second line, select the depreciation expense account you use to track your other expenses. Then enter the depreciated amount in the Debits column.
Select Save.
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