Fixed Assets And Quickbooks

Asset - Fixed Assets And Quickbooks

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I. Definition of a Fixed Asset

What I said. It shouldn't be in conclusion that the true about Asset. You see this article for information about an individual want to know is Asset.

Asset

Using the acronym T.I.M.E. We can define a fixed asset pretty easily. A Fixed Asset is Tangible. It is real property, you can touch it. Items like goodwill are intangible. Goodwill is the amount a someone would pay over the actual value of a business because of it's good reputation, location or name. There is no definitive amount that can be assigned to the goodwill type in any transaction as it is a subjective value.

A Fixed Asset is catalogue Not!. Okay there's a dinky bit of license taken with this one, but otherwise, the acronym doesn't work. catalogue is not a fixed asset and should never be determined as such. catalogue is part of the Cost of Goods Sold account.

A Fixed Asset is Material in value. I had a client at one point that tried to depreciate a 0 software package for ten years. If the asset is under 0, put it in as an cost not a fixed asset. If it is over 00 it should be depreciated. Amounts in in the middle of can arguably go whether way depending on the asset itself. Ask your tax expert for the best advice.

A Fixed Asset's Estimated Life Span is greater than 1 year. In other words, printers, computers, vehicles, structure all last longer than one year (unless it's a Ford) okay that was a joke. If the asset isn't anticipated to last longer than one year, it is not a fixed asset.

Ii. Fixed Asset Cost

Go to the List menu and click on the Chart of Accounts to open it. Hit Ctrl and N for a new catalogue and pick fixed asset. Ideally this is done in the year of purchase when entering into Quickbooks, if it is not, then click on the chance balance and enter the cost of the fixed asset at the time of the purchase.

I find it helpful to precisely originate one fixed asset catalogue for the item and to enter the cost and other information in a sub-account under that item to help keep track of all things in a more orderly way, which helps if you have more than one fixed asset. It is foremost to use the total amount of the cost, not the amount financed as the depreciation is based on total cost, we will deal with the amount precisely owed later in this article.

Iii. Fixed Asset Accumulated Depreciation

Vehicles can be depreciated from 5 years of the date of purchase. Computers and definite tools can be depreciated over 3 years as they do not tend to last for 5. structure can be depreciated over a duration of 27.5 years. The separate kinds of depreciation consist of level line, double declining balance, etc and they would be a branch of a new article. (Depreciation versus Section 179 - advent soon)

Create someone else Fixed Asset account, again in a sub-account under the item and name it as below:

Vehicle

Vehicle Cost

Vehicle Accumulated Depreciation

If the narrative of the item is too long, Quickbooks will abbreviate it for you, just make sure you understand what it is for, car - Acc. Dep would work just as well. Accumulated Depreciation is entered as a negative figure that reduces the value of the item being depreciated. With vehicles you have to suspect what the value of that car would be in 5 years, you can use http://www.bluebook.com to find a 5 year old car of similar make and model and use that figure.
In other words, if your 000 car will be worth 00 in five years, you depreciated the dissimilarity of 000 over that five year duration which would be 00 of accumulated depreciation per year. (or 0 a month if you want pinpoint accuracy while the year. It is best to use the registers to enter Accumulated Depreciation, no payee is principal as this is not a monetary transaction here, you are just removing the value of the fixed asset and assigning it to an account. Which account?

Iv. Depreciation Expense

The catalogue you use to assign to the accumulated depreciation is the depreciation cost account. And again, I find it helpful to have Depreciation cost be the parent or main catalogue and originate a sub-account for each fixed asset you are depreciating so you can keep track of each fixed asset's useful life and the amounts being depreciated. This will help you keep a good eye on fixed assets that you will need to replace soon.

V. Fixed Assets and the Loans That Go With Them

Most business owners do not have the capital to pay cash for their fixed assets, and in a lot of cases it is not to their advantage to do so. So how do you deal with the loan? Return to the chart of accounts and hit Ctrl N to originate a new catalogue which will be a Long Term Liability account. Enter the amount still owed as your chance balance and your as of date. Still using the car example, it would be:

Vehicles

Vehicle Loan - 20000

Enter a bill for the cost amount when you receive it. And check for the breakdown of what interest you are paying versus what is precisely going to the principle of the loan. Apply the principle amount to the car Loan catalogue on the check or bill and if you have not created an interest account, then do so. Break it down for each item or fixed asset you are paying interest on. This would not be where to put prestige Card Interest, make sure that it's in a isolate category.

Interest Expense 2338

Vehicle Interest 350

Equipment Interest 888

Building Interest 1100

Credit Card Interest 430

Each time you issue a check, the principle amount should be deducted from what you owe on the car and the statements you are sent should reconcile nicely.

Just a note for those who are financing a car through a prestige card company, make sure that you are not recording it as a prestige card payment, make sure that the fixed asset information is entered and literal, otherwise you could be losing the advantage of depreciation cost being deducted from your chargeable income. And keep an eye on those fees from prestige card financiers as they tend to fluctuate wildly in all things from interest paid to fees they fee you for the privilege of paying them over the phone or online. This is money not going toward paying off the car and is more of a detriment to your financial photo than it is an advantage.

A amount of these associates have been guilty of adding unnecessary fees to make reimbursement of the loan extremely expensive. One business in particular has a cost office in Miami and one in San Diego. Where does a customer in Miami have to mail his cost to? San Diego. Why? Because there is a greater chance of being able to fee you a late fee, even if the cost is mailed on time. They are predators, so beware!

I hope you obtain new knowledge about Asset. Where you possibly can put to use in your day-to-day life. And most of all, your reaction is passed about Asset. Read more.. Fixed Assets And Quickbooks.