Tracking the book value of long-term assets as they decline over time can be a tricky business. The amount by which they depreciate can affect not only the worth of a business, but the size of a tax bill. It's important to develop good record-keeping habits where such fixed assets are concerned. It's also important for accountants and their clients to work together to make sure all the necessary information is being recorded so both financial statements and tax returns are correct.
Tracking fixed assets with fixed asset items enables you to record such information about an asset as purchase date and price, whether the asset was new or used when purchased, and the asset's sale price if you decide to sell it. You can also generate customizable reports listing all your fixed assets.
The simplest way to create a fixed asset item is while you are entering the transaction used to purchase it, but sometimes you may want to create a fixed asset item directly from the Fixed Asset Item list. For example:
· You intend to purchase or have already purchased several items that you want to track as fixed assets, such as a suite of office machines
· You pay for a fixed asset with cash.
· You transfer a personal asset to your business.· You pay for a business asset with personal funds.
To do this task
To do this task
1. Go to the Lists menu and click Fixed Asset Item List.
2. Click Item at the bottom of the list and click New to open the New Item window. Fixed Asset is preselected as the item type.
3. In the Asset Name/Number field, enter an identifying name or number for your fixed asset.
What you enter here appears on fixed asset item reports. Enter a name or number that will help you distinguish this item from all others on the list.
4. Click the Asset Account drop-down list and choose an asset account, or create a new one.
5. Enter purchase information:
o Purchase Description: Enter a brief description of the purchase of your fixed asset.
o New/Used: Select whether your asset is new or used.
o Date: Enter the date you purchased your fixed asset, or click the pop-up calendar icon to the right of the field and select one. Today's date is selected by default.
o Cost: Enter the cost of your fixed asset.
o Vendor/Payee: Enter the name of the vendor from whom you purchased the asset.
Important: The Vendor/Payee name is not saved to your Vendor list when you save this fixed asset item to your Fixed Asset Item list. Click Vendor Center and add the vendor there if necessary.
6. (Optional) Enter asset information:
o Asset Description: Enter a brief description of your fixed asset.
o Location: Enter a location; for example, if your asset is real estate, enter an address. If your business has more than one location, enter where your asset has been placed into service.
o PO Number: Enter the number of the purchase order you used to purchase your asset, if applicable.
o Serial Number: Enter the serial number or VIN of your asset.
o Warranty Expires: If applicable, enter the date the warranty for your asset expires.
o Notes: Enter any notes concerning your asset that you want to track.
7. Leave the sales information blank and click OK.
Note: When recording any transactions involving your fixed asset, be sure to choose the appropriate fixed asset item from the Items tab or Item column. This enables you to track depreciation and other costs.