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mlgriswold74
Level 1

How do I enter a deposit paid for a fixed asset?

Quickbooks Pro 2021

I'm purchasing a piece of equipment and have paid a deposit to the company building the machine. 

The balance is due once the machine is ready to ship.

How do I account for the deposit now and what do I do with it once the balance is paid?

Also, since this is a fixed asset, how do I account for the shipping and duties associated with the machine and mark for depreciation tracking?

 

 

Solved
Best answer October 12, 2020

Best Answers
john-pero
Community Champion

How do I enter a deposit paid for a fixed asset?

Last question first: any and ALL costs associated with a fixed asset, including tax, duty, shipping, are added to the fixed asset basis and can only be depreciated as part of the whole.

 

First question: enter a vendor Bill for the entire cost as you know it, posting to a new Fixed Asset account specifically for this machine.  You can future date the bill for the projected in service date so that accrual accounting follows when you get it.  Then it is a simple matter of paying a portion (your deposit) against this Bill, and the balance upon delivery.  If you get additional billing for charges you do not know amounts yet simply add those as a new Bill at the time you know what you owe (posting these charges, as aI said, to the fixed asset account)

 

Depreciation is recorded in QB when you take it, as a journal entry debit depreciation expense and credit accumulated depreciation.   Some users will set up a separate accumulated depreciation account as a sub account of the asset to easily see present value of the asset - BUT, you will no longer have a single A.D. fixed asset account as a line item on your balance sheet.  Depreciation expense is a tax item and QB does not create your form 4562 for you. Typically with straight-line deprectiation you get at most 1/2 of 1 year deprectiation in year of first service, so a 5 year asset gets deduction 1/10, 1/5, 1/5, 1/5, 1/5, 1/10 over 6 fiscal years.  Consult with your tax CPA on how long this machine cost can be depreciated

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1 Comment
john-pero
Community Champion

How do I enter a deposit paid for a fixed asset?

Last question first: any and ALL costs associated with a fixed asset, including tax, duty, shipping, are added to the fixed asset basis and can only be depreciated as part of the whole.

 

First question: enter a vendor Bill for the entire cost as you know it, posting to a new Fixed Asset account specifically for this machine.  You can future date the bill for the projected in service date so that accrual accounting follows when you get it.  Then it is a simple matter of paying a portion (your deposit) against this Bill, and the balance upon delivery.  If you get additional billing for charges you do not know amounts yet simply add those as a new Bill at the time you know what you owe (posting these charges, as aI said, to the fixed asset account)

 

Depreciation is recorded in QB when you take it, as a journal entry debit depreciation expense and credit accumulated depreciation.   Some users will set up a separate accumulated depreciation account as a sub account of the asset to easily see present value of the asset - BUT, you will no longer have a single A.D. fixed asset account as a line item on your balance sheet.  Depreciation expense is a tax item and QB does not create your form 4562 for you. Typically with straight-line deprectiation you get at most 1/2 of 1 year deprectiation in year of first service, so a 5 year asset gets deduction 1/10, 1/5, 1/5, 1/5, 1/5, 1/10 over 6 fiscal years.  Consult with your tax CPA on how long this machine cost can be depreciated

View solution in original post

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