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Level 2

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Hi all, 

Just curious if anyone has any best practices within Quickbooks Online for tracking their fixed assets and depreciation. 

In the desktop version of the product, I would typically have in my chart of accounts one parent account for an asset type and sub-accounts for each specific asset. 

Example: 

Machinery and Equipment
-- Equipment #1 - Cost
-- Equipment #2 - Cost
etc. 

I would then have one parent account for depreciation of that asset type and sub-accounts for each specific asset. 

Example: 

Accumulated Depreciation of Machinery and Equipment
-- Accumulated Deprecation of Equipment #1
-- Accumulated Deprecation of Equipment #2
etc. 

The benefit of this for me is that the total cost of the assets and the total amount of accumulated depreciation automatically sum in reports, so it is very easy to prepare the financial statements from this data. 

Now, in Quickbooks Online (I'm a new user) I see there is checkbox when creating an asset account to track deprecation. This automatically creates a cost and depreciation sub-account, both nested under the asset account. 

This looks nice visually but lacks the benefit of automatically totalling up all cost and all deprecation for that asset class. 

I'm wondering, what are the benefits of using Quickbooks' built in accounts for cost and depreciation vs. creating them manually? Do these accounts serve any purpose beyond the convenience of having them created for you and the visual appeal?

Will I be missing any other functionality if I create my own depreciation accounts using the main depreciation account as the parent instead? 

Would love to hear how others are tracking assets and deprecation as well. 

Thanks!

Solved
Best answer 10-15-2018

Best Answers
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Level 15

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

You can do it either way, you do not lose any functionality, but what you lose is the ability to easily see the book value of the fixed asset, the parent account which should not be posted to, will sum the cost and depreciation (algebraic sum) and show the current book value

if you do it with one parent account for all depreciation you have to look up the fixed asset cost, scroll and subtract the depreciation amount for that asset mentally or on a calculator to find book value.

View solution in original post

21 Comments
Highlighted
Level 15

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

You can do it either way, you do not lose any functionality, but what you lose is the ability to easily see the book value of the fixed asset, the parent account which should not be posted to, will sum the cost and depreciation (algebraic sum) and show the current book value

if you do it with one parent account for all depreciation you have to look up the fixed asset cost, scroll and subtract the depreciation amount for that asset mentally or on a calculator to find book value.

View solution in original post

Highlighted
Level 2

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Thanks Rustler! That's helpful. So it sounds like it's just a matter of preference in terms of what values you'd easily like to see in the chart of accounts.

I do like the appearance of having both cost/depreciation under the single account. But then I have to sum up a dozen accounts to get the single line item for my financials which is also a pain ;) I guess I'll have to think about it.

Thanks again!
Highlighted
Level 15

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

why would you have to sum the depreciation accounts?

if you want to see the total depreciation per period, open the P&L and look at depreciation expense, that is the other side of the depreciation entry - all depreciation amounts use the same expense account for posting

debit depreciation expense
credit accumulated depreciation - asset name
Highlighted
Level 2

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

True, however, when I'm preparing tax return for this org using the standard GIFI form for financial info, they also have on the balance sheet one item for each asset class, e.g.,

ASSETS

Machinery and Equipment
Acum. Depreciation of Machinery and Equipment

So I find myself needing to sum up all those amounts on the asset side. Not a big deal either way obviously :)
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Level 15

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

oops sorry I missed that this was Canadian and I know nothing about Canadian tax reporting requirements
Highlighted
Level 2

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

No problem -- thanks a lot for your help!
Highlighted
Level 1

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

I realize this is an older question, but I just wanted to add that you could still track each individual asset. In the Chart of Accounts (where >> is sub account) create a parent account and sub accounts for each asset you want to keep track of accumulated depreciation and the current "book" value as follows:

Equipment 1 (parent acct.)
>>Equipment 1 cost (sub acct.)
>>Accumulated Depreciation Equipment 1

A) Enter the purchase amt (value) in the "Equipment 1 cost (sub acct,)" and then
B) each month (or year, whichever your company does) enter the amt of depreciation in the "Accumulated Depreciation Equipment 1(sub acct.)"  
The parent account "Equipment 1" will automatically total the current value of the Asset (Cost -less- Accum. Depre.).
 
You can do this for all your assets, and the current value can be seen in the parent acct, while the accum. depre. amt can be just as easily found in each sub acct. If you would also like to know the Total Amt. of all Depreciation (for all assets combined) you could create a parent Accum. Depre. Acct. to collect that info for you as well. However, most financial reports want you to list each asset and its depreciation amt individually.
Hope this can help someone in the future.
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Level 8

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Old question I see, that popped up after a similar one I just responded to so had to read and must reply.  I definitely agree with accounting for accumulated depreciation by individual asset to see the NBV easily,
but must disagree with the other side of the entries, ie, posting all depreciation expense to one account. This may work for some small companies but not for all, particularly those in my industry and others too. Depreciation, like any other expense, must be properly recorded depending on what a cost represents, so for example in QB it may need to be split by Class if classes are used to define groups of expenses for different divisions or locations. Divisions might be business areas, for example if you have IT biz with alot of computer equipment used for just that division might need to segregate. Indirect cost pools as used in my industry of GovCon are another similar possible reason for needing to split depreciation expense. This is not something you can define in general for all companies but just know that there is no reason to be limited to only one depreciation expense account if/when makes sense see more detailed amounts.
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Level 1

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

How would you feel about x1 Depreciation Expense Parent account and use Sub Accounts for the various assets / categories / classes?

 

Cheers,

 

 - Alan

Highlighted
Level 8

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Summary vs. detail accounts in QB are personal preference for how you want to see on reports.

I look at Trial Balance report for almost everything since I want to see all accounts on one page. Summary accounts just make the report longer and redundant from my view, but if you provide reports to others outside of accounting, they might prefer to see the summary level reports. 

 

How and where you FA detail and compute depreciation is what I would consider for how to decide.  If your CPA computes for you annually for books and taxes or if you do manually and what level of detail is on those reports since no need for redundant detail if one is reliable. 

Hassle to avoid is when you sell or dispose of asset, want to easily see NBV to write off books.

 

Generally FA system shows line for each asset, so on books, I would just show asset categories, but I do like to see if by category most is depreciated or not and use that for budgeting and to estimate depreciation (by cost pools in my industry), but similar to Classes in QB for the split.  Again, this is just my personal preference, since you tend to have preferences after 3 decades!

 

However, I must mention that most of my clients have almost no fixed assets since we use GAAP minimum of $5000 for most or IRS Safe Harbor minimum of $2500 for my smaller clients and me, but of course when I was W-2 employee for much larger companies saw way more FA.

 

What I see on small biz is some CPA's capitalizing items as low as $100, which is so crazy to me.

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Level 1

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

QuickBooks Desktop Pro 2018

If you enter all fixed assets in the Chart of Accounts using the parent account and two fixed asset type accounts as sub accounts, what of the Fixed Asset Item List?

Is there any point in filling in the Fixed Asset Item List if you list the assets in the Chart of Accounts?

Are there problems if you duplicate and enter assets in both places?

Any help appreciated. 

 

Highlighted
Moderator

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Hello there, Bobby Chiggins.

 

Let me bring clarifications to your concern about entering fixed assets in QuickBooks Desktop.

 

When you enter two fixed asset type accounts as sub accounts using one parent account, you'll need to create a separate Fixed Asset Item for each of these sub accounts in QuickBooks.

 

Also, filling in the Fixed Asset Item List is highly recommended for it contains a detailed information that you may need for future tracking purposes.

 

Lastly, there shouldn't be any problem if you enter these assets in both Chart of Accounts and Fixed Asset Item List as long as you choose the correct Asset Account used in both places.

 

If there's anything else I can further help, please let me know. It's always my pleasure to assist.

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Level 8

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

So there is no way to only input one time, like to the FA listing and have that flow into GL based on assigning GL account number to FA when input?  Dual data entry sucks for sure.

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Level 1

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Hi there,

I use this same method and was wondering how you add maintenance and repair costs using this system. I need to track what is being spent on equipment. Any advice would be helpful.

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QuickBooks Team

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Hi sunsetranch,

 

You can create an expense account and use it when recording your maintenance and repair cost. Let me walk you through how.

  1. Press CTRL+A.
  2. Click the Account drop-down.
  3. Click New. Then, click the Expense radio-button.
  4. Click Continue.
  5. Follow the steps that will guide you through the rest.
  6. Click Save & Close.

Once done, use that account when creating an expense transaction.

 

You can read this article for your reference: Expenses and vendors.

 

Let us know if you need help with anything else. The Community is here to help.

Highlighted
Level 1

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?


@ShiellaGraceA wrote:

Hi sunsetranch,

 

You can create an expense account and use it when recording your maintenance and repair cost. Let me walk you through how.

  1. Press CTRL+A.
  2. Click the Account drop-down.
  3. Click New. Then, click the Expense radio-button.
  4. Click Continue.
  5. Follow the steps that will guide you through the rest.
  6. Click Save & Close.

Once done, use that account when creating an expense transaction.

 

You can read this article for your reference: Expenses and vendors.

 

Let us know if you need help with anything else. The Community is here to help.


 

Highlighted
QuickBooks Team

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

It's great to hear again from you, @sunsetranch.

 

Yes, I can guide you in creating an expense account. Let's get started!

  1. Go to the Lists menu.
  2. Choose Chart of Accounts.
  3. Click the Plus Icon (+).
  4. Select Expense account.
  5. Enter the account details.
  6. Click Ok.

 

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To learn more about managing your chart of accounts, you may refer to this article: Your Chart of Accounts (Go to page 45.)

 

Let me know if you have other questions. I'm always here to help.

Highlighted
Level 1

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Let me give back ground first: I have a new tax client that uses QB Enterprise 2018. When I was reconciling the book depreciation schedule and from tax software to their balance sheet, I found discrepancies.

When I called the client's bookkeeper she showed me that she had the missing assets I was looking for plus a whole lot more, in the fixed asset list. The problem is they are not flowing to the chart of accounts.

Finally the question: How do I set them up so that they show up in both areas?

Thanks in advance for your help.

 

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QuickBooks Team

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

It might be these assets are inactivated, Renee D.

 

We'll have to activate them. This way, these accounts will show in the list and the reports. Here's how:

  1. Click Lists.
  2. Go to Fixed Asset Item List.
  3. Tick the Include inactive box.
  4. Click the x icon to activate the fixed asset.

Although, if they're already deleted, you'll have to recreate them. Here's how:

  1. Click Item in the Fixed Asset Item List window.
  2. Select New.
  3. Fill in the necessary fields.
  4. Click OK.

You can get back to this thread after trying the recommended steps. We'll be right here to help you.

Highlighted
Level 1

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Thank you for the suggestion,

Will they then show up on the balance sheet?

 

Highlighted
QuickBooks Team

Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

Thank you for getting back here in the Community, @Renee D.

 

I'll appreciate you performing the steps provided by Kristine Mae. 

 

Yes, Fixed assets most usually appear on the balance sheet. Wherein a balance sheet is a financial statement that reports the company's assetsliabilities, and equity at a specific point in time. 

 

Moreover, a fixed asset item list is used to records the details of which assets you own like property, plant, and equipment. 

 

Also, I'll be adding this article that you can read through to learn more about tracking your fixed assets using the Fixed Asset Manager (FAM): Use Fixed Asset Manager in QuickBooks Desktop

 

Feel free to leave a reply below if you have additional questions about assets. I'm always here to help you. Stay safe and take care always, Renee D. 

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