Accumulated Amortization

jmcglynn1 · ‎July 23, 2020

I would like to group the asset with the accumulated depreciation directly under the asset on the Balance Sheet. However, I understand the asset is categorized as a fixed asset, however, the accumulated depreciation is categorized as an "other asset" so it can't grouped directly under the asset. Is this correct? Is there another way to keep the asset and accumulated depreciation together on the Balance Sheet?

Also, should the accumulated depreciation show up as a negative number on the Balance Sheet?

vpcontroller · ‎July 25, 2020

@jmcglynn1 wrote:

Thank you for your help. Someone else in this community said accumulated amortization should not be seen as a negative number on the balance sheet so I am confused on this... I credited accumulated amortization and debited amortization expense. The QuickBooks Online Balance Sheet shows this:

Fixed Asset $850,000

Accumulated Amortization - $50,000

Total Fixed Asset $800,000

Is this correct? The other community member said the Accumulated Amortization would not be a negative number but QuickBooks would still subtract the amount because it considers it a Contra Asset.

@jmcglynn1

Yes, the Accumulated Depreciation would be a negative number, always as a Contra Asset account.

Normally, you will have the Fixed Asset type as a parent account in QBO and then you will have two sub-accounts (original cost and accumulated depreciation) under that FA account type.

Example:

Fixed Asset for Computers:

Original Cost = $850,000

Acc Depreciation = -$50,000

Total FA for Computers = $800,000

I hope this helps!

View solution in original post

john-pero · ‎July 23, 2020

Last answer first, yes, accumulated depreciation or amortization is a negative number as an asset as it represents a total of annual expenses that reduce asset value. The accumulated accounts represent the sum total of ALL depreciation taken for ALL assets and so you cannot just move an account that might be affected by 10 assets underneath just one. It is what it is.

If you wish to have a sub-account for each asset that represents depreciation taken you can do so but you will have to journal entries from the single other asset Accumulated Depreciation to the sub fixed asset Depreciation Taken..It will change the way your balance sheet looks and will show an absolute zero value for any fixed asset that is fully depreciated, causing more confusion than not

jmcglynn1 · ‎July 25, 2020

Thank you for your help. Someone else in this community said accumulated amortization should not be seen as a negative number on the balance sheet so I am confused on this... I credited accumulated amortization and debited amortization expense. The QuickBooks Online Balance Sheet shows this:

Fixed Asset $850,000

Accumulated Amortization - $50,000

Total Fixed Asset $800,000

Is this correct? The other community member said the Accumulated Amortization would not be a negative number but QuickBooks would still subtract the amount because it considers it a Contra Asset.

vpcontroller · ‎July 25, 2020

@jmcglynn1 wrote:

Thank you for your help. Someone else in this community said accumulated amortization should not be seen as a negative number on the balance sheet so I am confused on this... I credited accumulated amortization and debited amortization expense. The QuickBooks Online Balance Sheet shows this:

Fixed Asset $850,000

Accumulated Amortization - $50,000

Total Fixed Asset $800,000

Is this correct? The other community member said the Accumulated Amortization would not be a negative number but QuickBooks would still subtract the amount because it considers it a Contra Asset.

@jmcglynn1

Yes, the Accumulated Depreciation would be a negative number, always as a Contra Asset account.

Normally, you will have the Fixed Asset type as a parent account in QBO and then you will have two sub-accounts (original cost and accumulated depreciation) under that FA account type.

Example:

Fixed Asset for Computers:

Original Cost = $850,000

Acc Depreciation = -$50,000

Total FA for Computers = $800,000

I hope this helps!

jmcglynn1 · ‎July 25, 2020

Whew! Yes, it does help! Thank you!

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