cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Community Explorer **

Reverse or delete a journal entry, or nothing?

I have made two adjusting journal entries for end of year 2018. 

 

But as per tax preparer recommendation, I had to delete the assets I had depreciated to instead expense them. I'll have them entered as an expense. Before, I do that, what is the procedure? Everything was already reconciled, and adjusted entries were made. Do I start with reversing or deleting the adjusting entries, or do I just add the expenses? 

 

The expenses might compromise credit card which is part of the journal entry adjustment. 

 

Thank you,

=)

1 Comment
Established Community Backer ***

Re: Reverse or delete a journal entry, or nothing?

without knowing the adjusting entries you made, there is no way of knowing how they affect things. But if you used inventory asset in a journal entry, delete it, you can not do that in QB ever with out messing up the balance sheet vs inventory valuation.

 

Typically, you buy a fixed asset and post that cost to the fixed asset account
then annually, you post depreciation to the fixed asset accumulated depreciation account and depreciation expense

 

It sounds like your tax guy is using accelerated depreciation to move the cost of the fixed asset to an expense to help with taxes, that is fine

If so then what you do is look at the fixed asset cost, subtract the total of the depreciation you already entered. That different is what you use for a journal entry
debit depreciation expense, and credit accumulated depreciation.

 

That leaves the fixed asset on the books with a book value of zero (asset value less total accumulated depreciation). Leaving it on the books is correct, it has some value when you sell it for scrap, trade it in, etc.