How to enter Depreciation into QuickBooks

Did you just get your depreciation schedule from your tax professional?

Are you ready to learn how to enter depreciation into QuickBooks?

In this video, I will share what depreciation is, and how to enter it into QuickBooks both for Desktop and Online users. 😊

➡️ Depreciation
In accounting terms, depreciation is defined as the reduction of recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible.

➡️ Assets
An example of fixed assets are buildings, furniture, office equipment, machinery, vehicles, etc.
Land is the only exception which cannot be depreciated as the value of land appreciates with time.

➡️ Rules…
Depreciation allows a portion of the cost of a fixed asset to the revenue generated by the fixed asset.

This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use.

This helps in getting a complete picture of the revenue generation transaction.

➡️ GAAP:​
In the United States, accountants must adhere to Generally Accepted Accounting Principles (GAAP) in calculating and reporting depreciation on financial statements.

GAAP is a set of rules that includes the details, complexities, and legalities of business and corporate accounting.

GAAP guidelines highlight several separate allowable methods of depreciation that accounting professionals may use.

➡️ IRS
The IRS has information about the depreciation and lifespan of assets.

➡️ Three main inputs are required to calculate depreciations:
1. Useful life – this is the time period over which the organization considers the fixed asset to be productive. Beyond its useful life, the fixed asset is no longer cost effective to continue the operation of the asset.
2. Salvage value – Post the useful life of the fixed asset, the company may consider selling it at a reduced amount. This is known as the salvage value of the asset.
3. The cost of the asset – this includes taxes, shipping, and preparation/setup expenses.

➡️ How the Different Methods of Depreciation Work
➡️ There are three methods for depreciation:
Straight Line
Declining Balance
Sum-of-the-Years’ Digits

➡️ What vehicles qualify for the full section 179 deduction?
SUVs, trucks, vans, and other vehicles that don’t qualify as passenger vehicles aren’t subject to the IRS limits. You can take a full depreciation deduction each year. Using bonus depreciation and Section 179, you may be able to deduct all or most of the cost of such a vehicle in a single year.

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I’d love to hear if this inspired an “aha moment” and if you are ready to start entering in your depreciation.

Timestamps: (QuickBooks Tutorial)

0:00 - Intro
0:37 - Take notes
0:44 - What is Depreciation?
1:14 - Assets
1:48 - Rules (Depreciation)
2:14 - GAAP
2:26 - IRS Website
2:39 - Three main inputs are required to calculate depreciation
3:01 - Three methods for depreciation
3:15 - Straight line method
4:07 - What vehicles qualify for the full section 179 deduction?
4:21 - What is Accumulated Depreciation?
4:51 - Capitalized Asset/Depreciation/Accumulated Depreciation
5:13 - Start with adding your Assets
5:25 - Add Accounts to enter Depreciation in QuickBoooks
6:04 - Setup Depreciation Accounts (Desktop)
7:58 - Sample COA (Online)
11:32 - Journal Entry (Desktop)
12:47 - Checking Reports (Desktop)
14:39 - Setup Depreciation Accounts (Online)
17:24 - Journal Entry (Online)
19:07 - Checking Reports (Online)
21:10 - Final Thoughts

I’d love to connect with you 👇

#CandusKampfer

[beverlywilliams]

I do not and I know I should. That is why I am watching this. So glad found your you tube channel. Thank you.

[yair]

As you mentioned, and one of the big advantages of QuickBooks is working around the Journal Entry, which is a bit intermediating for most unprofessional users, & can get you in trouble if you don't have any idea or experience with Ledgers, so it can be very helpful if you can post the process of by passing the Journal Entry by using the Chart of account only.

[sarahs]

This helped me so much!! Everything I read online completely neglected to mention the depreciation expense account, which was causing my asset to be out of balance. Thank you!

[kulwinderthind]

Your videos are very simple to understand clearly about topics. Could you please also make a video about how to track gst and file it online.

[suewahl]

Thank you so much! That was incredibly helpful.

[christinevalenti]

You're so much better than my accountant

[grizzygriz]

What is the name or form number that the accountant prepares that list all your depreciated assets? And does it show previous balances from prior year(s)? I want to check for accuracy. This video presentation was straight forward. Thank you

[dr.olivianews]

This was excellent. Thank you so much!

[jacquelinecasper]

Hi. Thanks for this video! It was really helpful. There was one part that confused me. You mentioned that the Depreciation shows up as an expense on the Balance Sheet, but I thought the Depreciation Expense is on the Income Statement and the Accumulated Depreciation shows up on the Balance Sheet. Can you please clarify? I am new and still learning. Thanks. :)

[mohammadmusabeh]

Hi, is there a way where i can define the asset life and have the system generate the Dep/Acc Dep monthly instead of manual entries? Thank you.

[stjepanvidovic]

good video. I have a question. For companies that are remote only and have an international contractors team, and which don't have any physical goods, how to do amortization/depreciation? I suppose that they probably have intangible assets, such as know-how. How to add it in that case? How to even valuate that know-how properly?

[accountonmystillc]

Hi! Thank you so much for this! This was very helpful! How would you suggest listing over 20 FAs in QBO if coming from an previous CPA with no bookkeeping and only the Tax Asset Detail from Desktop? They have disposed of over half the list and added others.

[TalinsRealZ]

Hello! I am never given any worksheet from my CPA showing my journal entries I need to make on depreciation for any fixed asset. Is there a way to find them on the tax returns or figure out what they should be? I have fixed assets that are from prior years that I'd like to remove from my books that I have sold especially in 2021.

[israelalvarado]

question, when i want to create an depreciation account as a sub account on an asset, i don't get the same window that you get, i get asset>fixed assets. and everything else is grayed out. it will not let me create it under a sub account.

[marketbuy]

You started showing us how to set up a Fixed Account. You then immediately confused us by switching around by setting up Accumulated Depreciation Account. Was there a video on how to set up Fixed Account? I looked in your library but did not see one.

[debblouin]

I prefer to book depreciation monthly so I have a better income statement review by the 10th.

[staceywilks]

Thank you - how do you enter the "Original Cost"?

[monicagranados]

Thanks! Please, I don't understand what is the use of creating the items in "Fixed Asset Item List"... Is there no way to "Call" them in the registry? is it just to have the information?

[AZdomingo]

If I have 5 vehicles should I do the depreciation in a sub account also or is it necessary

[thomwalker]

How to set up a loan from your company to another entity?