Please note that since this video was created. QuickBooks Online has changed their method of entering Fixed Assets into their software for some QBO users. I'm sure there will be some takeaways that will be handy for your from this video regardless. But, if your screen looks different at the enter new Chart of Accounts screen that is why. We will make a new video soon to address this change.
Thanks really well described and clear. Now can you make a video on the depreciation ? There's plenty out there your clarity works for my work flow and brain !
I'm glad I could help and thank you for this feedback! I can add a Depreciation video to the list and I'm also in the process right now of creating some online video ecourses that will also cover things like depreciation in much more detail. Thanks again!
This is very helpful. Quick question, what if I don't know which account the asset was paid out of and therefore can't create an expense? Can I just make a journal entry?
Glad it helped! Yes you can, depending on the situation it sounds like you could offset the Fixed Asset debit to an Equity account credit in a journal entry, the Equity account depends, could be something like Opening Balance Equity or Owner's Investment but I can't say for sure
Hi Gunnar - I'm using QBO Simple Start. When I create a new account for Fixed Assets, I do not get the check box "Track depreciation of this asset". Is this a ploy to get me to upgrade in order to do something as basic as tracking depreciation of fixed assets?
It is not, they changed the layout of the Chart of Accounts experience since I first created this video. I plan on making a new video talking specifically on Fixed Asset with this new layout, but in the meantime, here's a link talking in general about the new Chart of Accounts experience: th-cam.com/video/JYFQhe6BPXs/w-d-xo.html
Try this as QuickBooks Online has changed the way some users see their Chart Of Accounts screen since I made this video. Go back to your Chart of Accounts and hit "New" in the top-right, from there, you may not see "Fixed Assets" but do you see "Assets"? If so, click on that, and from there under "Save Under" Hit that arrow and scroll down until you see "Fixed Assets" and select that option.
As of 10/2022, QBO no longer has the option to track depreciation when you enter a new asset account. My question is when you create a new asset account and QBO automatically maps it to Opening Bal Equity - how do you zero out Opening Bal Equity?
@@staceywilks184 Ok, you should offset the debit of the Fixed Asset account with a credit with the loan liability account. There are a few ways to do this and it really depends on the current situation of your books on how to handle this from here. I'm assuming you already entered the Fixed Asset in QBO and put a beginning balance in? Is that truck loan liability put into your books yet?
Something else that I don't think you mentioned is that doing this your method does not cause QBO to offset the entry with an entry to Opening Balance Equity that you'll have to clean up at a later date.
Hi When my business first started i was gifted £8000 by a relative to buy a vehicle, i put £2000 towards it myself. How do i record this, as the money received isnt a loan and it went straight to the seller of the vehicle
Hello, I'll explain what I would most likely do in this case, but keep in mind that I am not a tax professional so I would seek outside counsel for tax purposes. What I would most likely do is offset the debit to the Fixed Asset account with a credit to an Equity account, most fitting here is probably the "Owner's Investment" Equity account. So the Journal Entry would look like this: Debit: Vehicle Fixed Asset Account: 10,000 Credit: Owner's Investment Equity Account: 10,000 This is assuming your 2,000 portion was paid for via personal funds. If your 2,000 portion was taken out of your business bank account, then I would adjust the Journal Entry as below: Debit: Vehicle Fixed Asset Account: 10,000 Credit: Owner's Investment Equity Account: 8,000 Credit: Business Bank Account: 2,000 Hope this helps!
If you know exactly which one to delete to make your books correct, then in order to find and delete that transaction you can go to your Chart of Accounts (Gear Icon in top-right, then under "Lists" hit "Chart of Accounts") then, go to either your Credit Card or the Fixed Asset itself's Register depending on where the transaction to be deleted exists and hit View Register. At this point you can either sort by Date or Amount in order to find this transaction. Make note on whether the transaction is reconciled or not (there will be an "R" listed to the right) as if so deleting it could negatively affect things potentially. Then, if determined that deleting this particular transaction is the right move, then you can click on it and then hit Delete.
I was with you until you said that if you have multiple payments, you can still do this and keep putting them into the original cost bucket. . . If that is what you are doing, you will never have the actual value of the asset showing until all the payments are made--maybe years. . . Am I missing something or is this method only good for assets paid for up front?
It depends. If you are paying for assets up front or only for a few payments in a short time period, you can just increase the loan original cost amount no problem. If we are talking about a loan, which it sounds like we are in this case, then the original entry would increase (debit) the original cost Fixed Asset account for the full value of the asset and be balanced by a credit (increase) of a loan payable account. Then, in that case, once the payments are being made for the fixed asset, then the only entry needed would be to lower the liability account, the fixed asset account will remain the same at the full value as the original cost.
The best I can answer from a distance would be to take a look at each individual Fixed Asset Register. That way, you can take a look at each debit and credit to see where the negative amount came from. If it is an "Opening Balance" transaction, that most likely reflects what entry happened when the Fixed Asset was entered into QBO. To find the register, to your Chart of Accounts: click the "Gear" icon in the top right, under "Lists" select "Chart of Accounts. From there scroll or search for those Fixed Assets. To the right of them, you should see a "View Register" link, click on this and you should be able to investigate further as to what caused the negative balance by viewing each debit and credit associated with that account. Hope this helps!
Can you provide any instruction on how to handle crypto currency? My client has three deposits from Coinbase and one withdrawal. I'm lost on how to record. Any help would be appreciated.
If I'm understanding your situation correctly, then you would add it by entering in a Starting Balance while creating the new Fixed Asset. This will increase the cost (value) of the Fixed Asset on the Balance Sheet and will be offset by an increase to the account "Opening Balance Equity" also on the Balance Sheet as opposed to a credit to your bank from the Bank Feed
That will be up to you and your tax accountant if you have one to choose the depreciation schedule. There are a few to research such as "Straight Line Depreciation", then you would figure out the depreciation length. A common one would be a Straight Line Depreciation for 5 years for example so a $1,000 asset would depreciate by $200 every year for 5 years. This will vary though depending on the asset and your choice of depreciation schedule. The main thing is that once you pick a schedule, that you are consistent with it year to year. Your depreciation should be tracked outside of QBO using a specified software or an Excel sheet would also work. QBO is not meant to "track" depreciation for you, but you should enter the depreciation into it (that's calculated outside of QBO) every year to keep your Balance Sheet matched with your tax returns.
Please note that since this video was created. QuickBooks Online has changed their method of entering Fixed Assets into their software for some QBO users. I'm sure there will be some takeaways that will be handy for your from this video regardless. But, if your screen looks different at the enter new Chart of Accounts screen that is why. We will make a new video soon to address this change.
Hi Gunnar,
any update on the new video?
thank you
th-cam.com/video/21dvzUuNa0o/w-d-xo.html Here's the updated 2024 video!
@@freightie7793 th-cam.com/video/21dvzUuNa0o/w-d-xo.html Here you go!
Thanks really well described and clear. Now can you make a video on the depreciation ? There's plenty out there your clarity works for my work flow and brain !
I'm glad I could help and thank you for this feedback! I can add a Depreciation video to the list and I'm also in the process right now of creating some online video ecourses that will also cover things like depreciation in much more detail. Thanks again!
Thanks so much for this amazing clear explanation! I finally understand how to add a fixed asset.
Thanks for posting Gunnar!
Very helpful. Thank you
This is very helpful. Quick question, what if I don't know which account the asset was paid out of and therefore can't create an expense? Can I just make a journal entry?
Glad it helped! Yes you can, depending on the situation it sounds like you could offset the Fixed Asset debit to an Equity account credit in a journal entry, the Equity account depends, could be something like Opening Balance Equity or Owner's Investment but I can't say for sure
Hi Gunnar - I'm using QBO Simple Start. When I create a new account for Fixed Assets, I do not get the check box "Track depreciation of this asset". Is this a ploy to get me to upgrade in order to do something as basic as tracking depreciation of fixed assets?
It is not, they changed the layout of the Chart of Accounts experience since I first created this video. I plan on making a new video talking specifically on Fixed Asset with this new layout, but in the meantime, here's a link talking in general about the new Chart of Accounts experience: th-cam.com/video/JYFQhe6BPXs/w-d-xo.html
My online QuickBooks does not have Fixed Assets as account type -- how do I add or amend account types. -- thanks very much
Try this as QuickBooks Online has changed the way some users see their Chart Of Accounts screen since I made this video. Go back to your Chart of Accounts and hit "New" in the top-right, from there, you may not see "Fixed Assets" but do you see "Assets"? If so, click on that, and from there under "Save Under" Hit that arrow and scroll down until you see "Fixed Assets" and select that option.
As of 10/2022, QBO no longer has the option to track depreciation when you enter a new asset account. My question is when you create a new asset account and QBO automatically maps it to Opening Bal Equity - how do you zero out Opening Bal Equity?
When was the Fixed Asset(s) originally purchased, this year or in some year prior?
@@essentiallyintentional We bought the truck earlier this year.
@@staceywilks184 Ok, for the purchase, was a loan taken out, or were business funds used, or were personal funds used, or some kind of combination?
@@essentiallyintentional We bought the truck through a dealership so we have a truck loan through them.
@@staceywilks184 Ok, you should offset the debit of the Fixed Asset account with a credit with the loan liability account. There are a few ways to do this and it really depends on the current situation of your books on how to handle this from here. I'm assuming you already entered the Fixed Asset in QBO and put a beginning balance in? Is that truck loan liability put into your books yet?
Something else that I don't think you mentioned is that doing this your method does not cause QBO to offset the entry with an entry to Opening Balance Equity that you'll have to clean up at a later date.
Yes that is correct! That is a very good point that I did not mention in the video that is another benefit of handling it this way
Hi
When my business first started i was gifted £8000 by a relative to buy a vehicle, i put £2000 towards it myself. How do i record this, as the money received isnt a loan and it went straight to the seller of the vehicle
Hello,
I'll explain what I would most likely do in this case, but keep in mind that I am not a tax professional so I would seek outside counsel for tax purposes.
What I would most likely do is offset the debit to the Fixed Asset account with a credit to an Equity account, most fitting here is probably the "Owner's Investment" Equity account. So the Journal Entry would look like this:
Debit: Vehicle Fixed Asset Account: 10,000
Credit: Owner's Investment Equity Account: 10,000
This is assuming your 2,000 portion was paid for via personal funds. If your 2,000 portion was taken out of your business bank account, then I would adjust the Journal Entry as below:
Debit: Vehicle Fixed Asset Account: 10,000
Credit: Owner's Investment Equity Account: 8,000
Credit: Business Bank Account: 2,000
Hope this helps!
How do I delete one of the duplicate credit card transctions in QBO, since the original balance was entered when we first set up CC Receiivables?
If you know exactly which one to delete to make your books correct, then in order to find and delete that transaction you can go to your Chart of Accounts (Gear Icon in top-right, then under "Lists" hit "Chart of Accounts") then, go to either your Credit Card or the Fixed Asset itself's Register depending on where the transaction to be deleted exists and hit View Register. At this point you can either sort by Date or Amount in order to find this transaction. Make note on whether the transaction is reconciled or not (there will be an "R" listed to the right) as if so deleting it could negatively affect things potentially. Then, if determined that deleting this particular transaction is the right move, then you can click on it and then hit Delete.
I was with you until you said that if you have multiple payments, you can still do this and keep putting them into the original cost bucket. . . If that is what you are doing, you will never have the actual value of the asset showing until all the payments are made--maybe years. . . Am I missing something or is this method only good for assets paid for up front?
It depends. If you are paying for assets up front or only for a few payments in a short time period, you can just increase the loan original cost amount no problem. If we are talking about a loan, which it sounds like we are in this case, then the original entry would increase (debit) the original cost Fixed Asset account for the full value of the asset and be balanced by a credit (increase) of a loan payable account. Then, in that case, once the payments are being made for the fixed asset, then the only entry needed would be to lower the liability account, the fixed asset account will remain the same at the full value as the original cost.
Nice work.
Please why are we having negative amount in some of these accounts.
-10,000$ etc?
The best I can answer from a distance would be to take a look at each individual Fixed Asset Register. That way, you can take a look at each debit and credit to see where the negative amount came from. If it is an "Opening Balance" transaction, that most likely reflects what entry happened when the Fixed Asset was entered into QBO. To find the register, to your Chart of Accounts: click the "Gear" icon in the top right, under "Lists" select "Chart of Accounts. From there scroll or search for those Fixed Assets. To the right of them, you should see a "View Register" link, click on this and you should be able to investigate further as to what caused the negative balance by viewing each debit and credit associated with that account. Hope this helps!
Can you provide any instruction on how to handle crypto currency? My client has three deposits from Coinbase and one withdrawal. I'm lost on how to record. Any help would be appreciated.
But how can you add the cost to the already fixed asset when it’s not on the bank fees. ?
If I'm understanding your situation correctly, then you would add it by entering in a Starting Balance while creating the new Fixed Asset. This will increase the cost (value) of the Fixed Asset on the Balance Sheet and will be offset by an increase to the account "Opening Balance Equity" also on the Balance Sheet as opposed to a credit to your bank from the Bank Feed
How do you know when something depreciates?
That will be up to you and your tax accountant if you have one to choose the depreciation schedule. There are a few to research such as "Straight Line Depreciation", then you would figure out the depreciation length. A common one would be a Straight Line Depreciation for 5 years for example so a $1,000 asset would depreciate by $200 every year for 5 years. This will vary though depending on the asset and your choice of depreciation schedule. The main thing is that once you pick a schedule, that you are consistent with it year to year. Your depreciation should be tracked outside of QBO using a specified software or an Excel sheet would also work. QBO is not meant to "track" depreciation for you, but you should enter the depreciation into it (that's calculated outside of QBO) every year to keep your Balance Sheet matched with your tax returns.