Tractor Asset Purchase

Hi there, Aaronc5150.

Welcome to the QuickBooks Community and thank you for choosing QuickBooks Online as your accounting software. I'll share steps to ensure you'll be able to record tractor assets for your business and to track the depreciation.

To start with, you'll have to go to the Chart of Accounts in QuickBooks to create a specific asset account for the tractor and to set up a depreciation account.

Here's how to create an asset account:

1. Go to Gear icon ⚙ and select Chart of accounts.
2. Click the New button.
3. From the Account Type dropdown, select Fixed Assets or Other Assets.
4. In the Detail Type dropdown, choose the option that closely describes the asset.
5. Name the account. If applicable, select the Track depreciation of this asset checkbox.
6. Enter the current value of your asset in the Original cost field and the as of date. If recording the loan, leave this blank.
7. Click Save and Close.

After that, you can follow the steps below on how to make a Depreciation account.

1. Click the Gear icon ⚙ and select Chart of Accounts.
2. Choose the New button.
3. From the Account Type dropdown arrow, select Other Expense.
4. In the Detail Type dropdown list, choose Depreciation.
5. Give the account a name, like "[Asset] depreciation]"
6. Click Save and Close.

Once done, you can now record the depreciation. You'll have to manually track depreciation using journal entries. This is because the QBO system doesn't automatically depreciate fixed assets. I suggest consulting an accountant before performing the process. They can provide suggestions on how to properly handle the transactions and the particular amount to be depreciated. Then, follow these steps:

1. Select the + New button. Then, select Journal entry.
2. On the first line, select the asset account you use to track the loan from the Account dropdown. Enter the depreciated amount in the Credits column.
3. On the second line, choose the Depreciation account you just created from the Account dropdown. Enter the same depreciated amount in the Debits column.
4. Click Save.

I'm also adding this article to further guide you in effectively managing your business using QBO: Help guide for QuickBooks Online. It contains topics about advanced accounting, banking, and payments to name a few.

Let me know if there's anything else you need help with. Know that I'm always here to help you anytime. Take care and keep safe!

Thank you for the information.  One more question.  Being that we are starting our books fresh in QBO in 2022, with no transactions in 2021 - should we still list the asset at the date of purchase in 2021 at the purchase price an record an entry showing the depreciation on 12/31/21? Only reason I ask, is not sure how QBO works and if we are not showing any regular transactions from 2021, is it OK to show this one for depreciation purposes? Thanks!