Explanation of how to record depreciation entries for fixed assets using manual entries instead of using the payroll module for users who don’t have this feature.
Depreciation entry has two methods:
Method One (Easiest):
- You can record the depreciation entry using quick entries, where the accumulated depreciation account is not affected. Instead, it is deducted from the asset value. Go to Accounting, then click the + button next to Quick Entries, select “Fixed Asset Depreciation,” fill in the data, and save.
The entry is as follows:
- Debit: Depreciation Expense
- Credit: Fixed Asset
Method Two (For Accountants):
- If your chart of accounts contains a depreciation expense account and an accumulated depreciation account, you can use manual entries:
The entry is as follows:
- Debit: Depreciation Expense
- Credit: Accumulated Depreciation
To determine the book value of the asset, subtract the accumulated depreciation from the asset cost in the financial statements.
Additional Notes:
- Method One is easier and does not require setting up additional accounts in the chart of accounts.
- Method Two provides accuracy in calculating depreciation value when tracking financial reports for assets.
