2.4.1 depreciation basics

[John Ralls]

On May 26, 2014, at 9:22 AM, David Carlson <david.carlson.417 at gmail.com> wrote:

> 
> I am just another user and I have not seen that particular manual. 
> However, I will hazard a guess that actually the depreciation
> transactions are not related at all to the purchase transactions, with
> the possible exception that they may all have split lines in the asset
> account  for your truck, depending on what account you used to
> accumulate the depreciation.
> 
> Further, the check for the taxes probably did not contain a split line
> in the asset account for the truck, since it was just a tax payment. 
> Thus you probably did everything right except for being in the register
> for the truck asset account, where you should not see the tax payment. 
> That would be in the checking account register.
> 
> It would behoove you to take care whether the amounts are correctly
> placed in the right hand or left hand column, "Deposit" or "Withdrawal",
> "Increase" or "Decrease" or otherwise named in the registers for
> different account types.
> 

The depreciation transactions *must* have a split in the Asset account holding the truck or a “depreciation” sub-account of it. That’s what depreciation means: Reducing the carried value of a tangible asset.

Since he’s capitalizing the tax payment, it also becomes part of the carried value of the asset and goes to the Asset account holding the truck (which is a good reason to create a separate account for the truck’s asset value, to keep the two transactions together) rather than to Expenses:Tax.

Regards,
John Ralls