Entering depreciation

[John R. Sowden]

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