Entering depreciation
John R. Sowden
jsowden at americansentry.net
Sat Jan 4 18:50:35 EST 2014
On 01/04/2014 12:38 PM, Sandeep Mukherjee wrote:
> Here's how I do it. I have two accounts - an Asset account for the car
> and an Expense account for the depreciation.
> The asset account initially contains the full value of the car.
> Thereafter, every month I calculate the depreciation amount (this is
> the most difficult part), and create a transaction something like
> this:
>
> Monthly Honda Depreciation Expense:
> DEBIT $100.00 Expenses:Auto:Depreciation-Expense
> CREDIT $100.00 Assets:Honda
>
>
> Hope this helps,
> Sandeep
>
When you post depreciation is based on how often you create financial
statements and how accurate you want them. If you create financial
statements quarterly, but only post depreciation annually, three
quarters will show more profit that is correct, possibly causing you to
make incorrect business decisions, and the fourth quarter will show a
big expense hit for depreciation compared to the other quarters.
Re: calculating the depreciation, create a spreadsheet depreciation
schedule, such as:
ASSET DT PURCH PURCH AMT SALV VALUE DEPREC BASE ACCUM DEPREC Q1_13
Q2_13 Q3_13 Q4_13 Q1_14 and so on.
That way you can just go to the chart and see what the amount should be
for the quarter. Each line can be an asset.
Hope this helps
John
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