Recording and depreciating assets

To manage assets in QuickBooks Online, you typically set up a fixed asset account, record the purchase (or loan), and track depreciation over time. Because asset purchases can involve complex variables like trade-ins, taxes, and down payments, we recommend consulting with your accountant to ensure your books are accurate.

Set up a fixed asset account

If you haven’t already, create an account to track the asset.

1. Select the Settings gear icon.
2. Choose Chart of Accounts.
3. Select New to create a new account.
4. In the Account Type dropdown, select Fixed Asset or Other Asset.
5. Select the appropriate Detail Type (for example, Vehicle). If you don’t see an exact match, choose the closest option.
6. Give the account a Name.
7. (Optional) If you want to track depreciation separately, check the box for Track depreciation. This will automatically create a subaccount for accumulated depreciation.
8. Enter the Original cost (if known) or leave it blank if you are recording the purchase via a journal entry or bill.
9. Select Save and close.

Record the asset purchase

How you record the asset depends on how you paid for it.

• Paid by check, credit card, or electronic transfer: Use the appropriate expense feature (Write a check, Expense, or Journal Entry) and select the Fixed Asset account you created as the payment account/category.
• Financed through a loan: You will need to set up a liability account for the loan (Account Type: Long Term Liabilities or Other Current Liabilities). When recording the purchase, you will debit the Fixed Asset account and credit the Loan Liability account.

Record loan payments

If you took out a loan to purchase the asset, you need to record the principal and interest portions of your payments separately.

1. Select + New.
2. Select Check or Expense.
3. Choose the bank account used to make the payment.
4. In the first line of the category column, select the Liability account for the loan and enter the amount for the principal.
5. Add a second line. In the category column, select Interest Expense (or create a new account if needed) and enter the interest amount.
6. The total amount should match your loan payment.
7. Select Save and close.

Record depreciation

QuickBooks Online does not automatically calculate depreciation; you must determine the annual depreciation amount (often with the help of an accountant) and record it manually, typically at the end of the year.

1. Select + New.
2. Select Journal entry.
3. On the first line, select the Depreciation Expense account (Expense type) from the Category column. Enter the depreciation amount in the Debits column.
4. On the second line, select the Accumulated Depreciation account (this is the subaccount linked to your Fixed Asset) from the Category column. Enter the same amount in the Credits column.
5. Select Save and close.