Fixed Assets And Quickbooks

Asset - Fixed Assets And Quickbooks

Good evening. Now, I learned all about Asset - Fixed Assets And Quickbooks. Which could be very helpful if you ask me and also you. Fixed Assets And Quickbooks

I. Definition of a Fixed Asset

What I said. It isn't the conclusion that the true about Asset. You check this out article for information about a person 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 number a person would pay over the actual value of a business because of it's good reputation, location or name. There is no definitive number that can be assigned to the goodwill class in any transaction as it is a subjective value.

A Fixed Asset is inventory Not!. Okay there's a minute bit of license taken with this one, but otherwise, the acronym doesn't work. inventory is not a fixed asset and should never be thought about as such. inventory 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 container for ten years. If the asset is under 0, put it in as an charge not a fixed asset. If it is over 00 it should be depreciated. Amounts in between can arguably go either way depending on the asset itself. Ask your tax pro for the best advice.

A Fixed Asset's Estimated Life Span is greater than 1 year. In other words, printers, computers, vehicles, buildings all last longer than one year (unless it's a Ford) okay that was a joke. If the asset isn't startling 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 inventory and elect fixed asset. Ideally this is done in the year of purchase when entering into Quickbooks, if it is not, then click on the opportunity balance and enter the cost of the fixed asset at the time of the purchase.

I find it helpful to absolutely create one fixed asset inventory for the item and to enter the cost and other data in a sub-account under that item to help keep track of everything in a more orderly way, which helps if you have more than one fixed asset. It is important to use the total number of the cost, not the number financed as the depreciation is based on total cost, we will deal with the number absolutely owed later in this article.

Iii. Fixed Asset Accumulated Depreciation

Vehicles can be depreciated from 5 years of the date of purchase. Computers and clear tools can be depreciated over 3 years as they do not tend to last for 5. buildings can be depreciated over a period of 27.5 years. The different kinds of depreciation contain straight line, duplicate declining balance, etc and they would be a field of a new article. (Depreciation versus Section 179 - coming soon)

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

Vehicle

Vehicle Cost

Vehicle Accumulated Depreciation

If the report of the item is too long, Quickbooks will abbreviate it for you, just make sure you understand what it is for, vehicle - 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 theorize what the value of that vehicle would be in 5 years, you can use http://www.bluebook.com to find a 5 year old vehicle of similar make and model and use that figure.
In other words, if your 000 vehicle will be worth 00 in five years, you depreciated the divergence of 000 over that five year period 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 requisite 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 inventory you use to assign to the accumulated depreciation is the depreciation charge account. And again, I find it helpful to have Depreciation charge be the parent or main inventory and create a sub-account for each fixed asset you are depreciating so you can keep track of each fixed asset's beneficial 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 cope the loan? Return to the chart of accounts and hit Ctrl N to create a new inventory which will be a Long Term Liability account. Enter the number still owed as your opportunity balance and your as of date. Still using the vehicle example, it would be:

Vehicles

Vehicle Loan - 20000

Enter a bill for the payment number when you receive it. And check for the breakdown of what interest you are paying versus what is absolutely going to the principle of the loan. Apply the principle number to the vehicle Loan inventory 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 credit Card Interest, make sure that it's in a detach 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 number should be deducted from what you owe on the vehicle and the statements you are sent should reconcile nicely.

Just a note for those who are financing a car straight through a credit card company, make sure that you are not recording it as a credit card payment, make sure that the fixed asset data is entered and literal, otherwise you could be losing the advantage of depreciation charge being deducted from your assessable income. And keep an eye on those fees from credit card financiers as they tend to fluctuate wildly in everything 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 vehicle and is more of a detriment to your financial photo than it is an advantage.

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

I hope you receive new knowledge about Asset. Where you'll be able to offer use in your evryday life. And above all, your reaction is passed about Asset.