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sigma-utilitiesl
May 18, 2022
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Assets and payment

  • May 18, 2022
  • 1 reply
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Hi,

 

Can someone please help. I recently bought some equipment. So I set it up as a tangible asset in the chart of accounts and put in the net cost (595). I also bought another piece of equipment at the same time and repeated this process. I paid for both these items together so there is one transaction to reconcile in the banking.

How do I show that 595 was paid off of the equipment to take the asset account to nil? I have tried creating an expense and allocating it to that asset account but it doubles the asset value to 1090 instead of reducing it to nil.

What am I doing wrong? Thanks

Best answer by paul72

Hi @sigma-utilitiesl 

 

I think you're misunderestimating ;-) the dark arts of accounting (certainly overcomplicating!).

The asset value (in the chart of accounts) should remain at £595 unless you devalue it (depreciate) at some point - this is usually done at the end of each tax year.

When you buy & pay for something what you're doing on the Chart of Accounts is moving value (asset or liability) from one account to another - like moving cash from one packet to another.

(In this case Asset > Accounts Payable > Bank)

This is why, when you created the Expense & assigned to the Asset category, QBO doubled the value in the Asset account - as far as QBO is concerned, you had bought another asset so moved the amount from Bank directly to Asset.

 

The easiest way to remedy is to delete the initial £595 you entered when setting up the asset account.

Enter the purchase as an Expense (to the asset account).

This will then be correct (you'll have a £595 asset & you'll have paid £595 out of your bank).

 

If you wish to depreciate at the end of the year, QBO will have setup a subaccount to use - but only do this under accountant supervision as there are different rules for different types of asset.

 

Hope this helps.

1 reply

paul72
paul72Answer
May 18, 2022

Hi @sigma-utilitiesl 

 

I think you're misunderestimating ;-) the dark arts of accounting (certainly overcomplicating!).

The asset value (in the chart of accounts) should remain at £595 unless you devalue it (depreciate) at some point - this is usually done at the end of each tax year.

When you buy & pay for something what you're doing on the Chart of Accounts is moving value (asset or liability) from one account to another - like moving cash from one packet to another.

(In this case Asset > Accounts Payable > Bank)

This is why, when you created the Expense & assigned to the Asset category, QBO doubled the value in the Asset account - as far as QBO is concerned, you had bought another asset so moved the amount from Bank directly to Asset.

 

The easiest way to remedy is to delete the initial £595 you entered when setting up the asset account.

Enter the purchase as an Expense (to the asset account).

This will then be correct (you'll have a £595 asset & you'll have paid £595 out of your bank).

 

If you wish to depreciate at the end of the year, QBO will have setup a subaccount to use - but only do this under accountant supervision as there are different rules for different types of asset.

 

Hope this helps.

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