How to record depreciation in Quickbooks Simple Start?

General Journal Entry: Credit Accumulated Depreciation (fixed asset account) Debit Depreciation Expense. This should have been done last year. Discuss with your accountant how he/she wants you to deal with it now.

machinery and I wrote off the entire

think I need to decrease the

other type of account but not

fixed asset or something else)?

The normal JE for recording Depreciation is:

Debit Depreciation Expense

Credit Accumulated Depreciation (asset)

HTH

Ok, so I curently have one fixed asset account that I created when I orginally bought this machinery and it has a $1000 debit from the original entry.

So now I should create another fixed asset account and call it Accumulated Depreciation and credit it $1000 and then create an expense account and call it Depreciation Expense and debit it $1000. I see how this entry would affect those two new accounts but does'nt that still leave the $1000 balance in the original fixed asset account unchanged. Seems like it should be $0 once it is fully depreciated.

The normal way of setting up a fixed asset is to create 3 accounts:

-(main) Machinery (opening balance =0)

-(subaccount) Cost (opening balance00)

-(subaccount) Accumulated Depreciation (opening balance=0)

When you look at the COA the Machinery account will show the balance of the

2 subaccounts. So when you book the Accumulated Depreciation entry of 1000 credit the new balance on the Machinery line will be zero. The idea of the Accumlated Depreciation account is to show the depreciation booked but leave the original cost of the asset untouched.

Hmmm, I do not see any support in Simple Start for creating sub accounts. What about if I do the following. First create the following three accounts:

Machinery (fixed asset) Accumulated Depreciation (fixed asset) Depreciation Expense (expense account)

When I buy a machine for $1000, debit the Machinery account and credit the checking account. On the last day of the year, credit the Accumulated Depreciation account $1000 and debit the Depreciation Expense account for $1000. This leave the Machinery account with a $1000 debit balance and the Accumulated Depreciation account with a $1000 credit. So since the asset is completely depreciated I would post a $1000 credit to the Machinery account to bring its balance down to $0 and make a balancing debit entry to the Accumulated Depreciation account for $1000 to bring its balance up to $0.

Does this make any sense?

I did not realise that you were using the new SS program. It does not support creating subaccounts.

Yes it makes sense. Alternatively you could skip the last JE and just add the Machinery and Accumulated Deprec lines to acknowledge that they net to zero. I don't think one would normally zero out the original cost. You might need that amount at some point in the future.