How to Record Equipment Purchases in QuickBooks?
Equipment purchases require you to create a fixed asset transaction so that you can track depreciation, the location of the equipment and other important information, such as warranty expiration and serial number. While you can also track vehicles as a fixed asset, using the Vehicle list allows you to track mileage and depreciation.
Fixed Assets
Transactions that use the fixed asset feature don’t support tracking of quantity. You must enter a unique transaction for each piece of equipment that you own. Tracking each item individually allows you to account for individual serial numbers, warranty expiration dates, purchase order numbers and the location of the item. You can also add a description and any notes pertaining to the equipment. After purchasing the item and recording it in your register, select the “Items” tab, choose “Fixed Item” as the Item Type and record the information for the item.
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Track Vehicles
The Vehicle list provides a comprehensive accounting of all of your company vehicles. You can access the Vehicle list by selecting the “Company” menu, and selecting “Enter Vehicle Mileage.” Choose the “Vehicle List” option and select “New” to create a new vehicle entry. Enter the name for the vehicle and a description, if desired. Once you save the vehicle, you can the track mileage for the vehicle. Select the “Company” menu, choose “Enter Vehicle Mileage” and provide the information for the dates of your trip as well as the starting and ending mileage.
Within QuickBooks, this journal entry actually gets made when you write the check to pay for the purchase. The one thing that you absolutely must do is set up a fixed asset account for the specific asset. In other words, you don’t want to debit a general catch-all fixed asset account.
If you buy a delivery truck, you set up a fixed asset account for that specific delivery truck. If you buy a computer system, you set up a fixed asset account for that particular computer system. In fact, the general rule is that any fixed asset that you buy individually or dispose of later individually needs its own asset account.
The reason for this is that if you don’t have individual fixed asset accounts, later on the job of calculating gains and losses on the disposal of the fixed asset turns into a Herculean task.
When you purchase equipment for your business, you will benefit from the purchase for several years, depending on how long the equipment lasts. Therefore, you can’t deduct 100 percent of the purchase price the year you make the purchase. You must depreciate the equipment, which means you spread the cost of the equipment over its anticipated life and deduct a portion each year. In QuickBooks, add a fixed asset account and two subaccounts for the cost and the accumulated depreciation.
1.
Launch QuickBooks and sign in with your username and password. Choose “Lists” and “Chart of Accounts” to display your QuickBooks accounts.
2.
Select “Account” and “New” to add an account. Select “Fixed Asset” as the account type. Enter a name that describes the capital equipment as the account name — for example, “Company Truck.” Choose “Next” to save the account and add a subaccount to track the cost of the fixed asset.
3.
Select “Subaccount Of…” and choose the fixed asset account you just created. Enter a name for the account such as “Truck Cost.” Choose “Next” to save the account and create a subaccount for depreciation.
4.
Select “Subaccount Of…” and choose the fixed asset account once again. Enter a name for the account, for example, “Truck Accumulated Depreciation.” Select “OK” to save the account.
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