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Chart of Accounts - Fixed Assets

Forum|Forum|5 years ago
March 18, 2021
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Hello Community

I believe I made an incorrect entry for a fixed asset, I'm trying to correct, and would like to confirm here. I bought a mega battery (expense), when entering the transaction, created a fixed asset category, created subcategory Depreciation, and Original Cost.

The value shown in the name of the asset row appears to double the purchase price. Is this accurate? The images below show my entry. My concern is the value of my asset will not match the tax return. Obviously I'm a little confused at what Quickbooks is doing, and looking for some feedback to help me figure this out.

Thank you and best regards,

QuickBooks Online

Best answer by john-pero

You put this in first as n expense, and additionally as a Fixed Asset. At less than $500, unless it is permanently attached to something like a building it is just a plain old straight expense. Expenses are record though Check or Expense and never or rarely ever in a Journal Entry. Delete the journal entry. Delete any reference to this Office Supplies or Small Tools as a Fixed Asset and re-record the purchase as what it is - and it is not something you have to depreciate

john-peroAnswer

You put this in first as n expense, and additionally as a Fixed Asset. At less than $500, unless it is permanently attached to something like a building it is just a plain old straight expense. Expenses are record though Check or Expense and never or rarely ever in a Journal Entry. Delete the journal entry. Delete any reference to this Office Supplies or Small Tools as a Fixed Asset and re-record the purchase as what it is - and it is not something you have to depreciate

William-01Author

Thank you John,

It was my understanding, property used for an income-producing activity, with a determined life for 1 year or more, must be depreciated?

I understand I entered the transaction as an expense, but I do believe I can still depreciate the asset?

Best Regards,

john-pero

There are exceptions from Section 179 to Safe Harbor de minimis rules where assets can either be written off 100% in year or purchase or straight expensed without even treating as an asset (drills, saws, computers, printers up to $2500 each)

But you cannot do both, expense and depreciate. If you add it as a fixed asset do not expense it also. The expense will be the annual depreciation. $500 @ 5 years is $50-$100-$100-$100-$100-$50 6 years to recover cost (first year half year) or a full $500 if it qualifies under the Section 179 rules.

If you elect safe harbor it would not be entered as an asset but as an expense.

Bottom line is you entered it twice. If you wrote a check it should only have as detail either the fixed asset OR the expense.it appears ypu used s journal entry - bad way to enter any purchase.

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