Hi, I purchased a three year VPN license. Please see if I've done the following steps correctly and please advise on the next steps. Thank you in advance for your help!
1) Created an expense using the receipts function and categorized the license as computer software
2) Added a new PPE asset called VPN under the Chart of Accounts
3) Under Transaction, I found the expense and recategorized it from computer software to PPE VPN. Of note, under the receipts tab this still shows as categorized under computer software and not the updated PPE VPN.
3) As for next steps, I would like the asset to have a zero value after three years. How do I expense this over three years and also depreciation the asset? I followed your accumulated depreciation discussion above but that would leave an asset on the balance sheet that I don't have anymore after three years.
Best,
Reed
Hi @ReedF22 , from your message, it sounds like you have recorded your purchase to a Property, Plant, and Equipment asset account. To record depreciation over the next three years, you will need to follow the steps in this article to create an additional account in your Chart of Accounts for recording the depreciation. Once the accounts have been created, you will be able record the depreciation amount in a journal entry each year.
I am struggling with this depreciation concept. In this journal entry example posted above, where is the connection to the asset being depreciated being made? There is no reference to the original asset here. So how would I know if this entry (looking back later) is for my computer or for my camera or something else entirely? And without this "connection" how would I be able to see the current book value of a particular asset?
Comments
Hi, I purchased a three year VPN license. Please see if I've done the following steps correctly and please advise on the next steps. Thank you in advance for your help!
1) Created an expense using the receipts function and categorized the license as computer software
2) Added a new PPE asset called VPN under the Chart of Accounts
3) Under Transaction, I found the expense and recategorized it from computer software to PPE VPN. Of note, under the receipts tab this still shows as categorized under computer software and not the updated PPE VPN.
3) As for next steps, I would like the asset to have a zero value after three years. How do I expense this over three years and also depreciation the asset? I followed your accumulated depreciation discussion above but that would leave an asset on the balance sheet that I don't have anymore after three years.
Best,
Reed
Hi @ReedF22 , from your message, it sounds like you have recorded your purchase to a Property, Plant, and Equipment asset account. To record depreciation over the next three years, you will need to follow the steps in this article to create an additional account in your Chart of Accounts for recording the depreciation. Once the accounts have been created, you will be able record the depreciation amount in a journal entry each year.
I am struggling with this depreciation concept. In this journal entry example posted above, where is the connection to the asset being depreciated being made? There is no reference to the original asset here. So how would I know if this entry (looking back later) is for my computer or for my camera or something else entirely? And without this "connection" how would I be able to see the current book value of a particular asset?
Thanks in advance.
John
Hi, Is there any "Worksheet" function to track the depreciation history?
Thank you for sharing this!