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arkvalleyinfo
October 16, 2018
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Best Chart of Accounts Structure for Tracking Fixed Assets and Depreciation?

  • October 16, 2018
  • 2 replies
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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!

    Best answer by Rustler

    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.

    2 replies

    Rustler
    RustlerAnswer
    October 16, 2018

    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.

      A
      arkvalleyinfoAuthor
      October 16, 2018
      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!
        S
        sunsetranch
        July 25, 2019

        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.

        S
        ShiellaGraceA
        July 25, 2019

        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.

          S
          sunsetranch
          July 30, 2019
          @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.

           

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