How to Use QuickBooks to Calculate Depreciation? - PowerPoint PPT Presentation

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How to Use QuickBooks to Calculate Depreciation?

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When using QuickBooks for your accounting system, you don't have to manually recording depreciation expense amounts for your business. The Planning & Budgeting section of QuickBooks includes Decision Tools, and one of those tools helps you figure out your depreciation expense. – PowerPoint PPT presentation

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Title: How to Use QuickBooks to Calculate Depreciation?


1
  • Depreciation is a tax-deductible expense that
    businesses can use to reduce their taxable income
    over the life of an asset. In this QuickBooks
    tutorial, we'll show you how to calculate
    depreciation using the company's accounts and
    reports.
  • What is Depreciation?
  • Depreciation is a tax deduction that allows
    businesses to reduce their taxable income by
    deducting the cost of an asset, such as a car,
    over its estimated lifetime. How to record
    depreciation based on the principle that an asset
    is worth less after it's used and worn down over
    time. There are several ways to figure
    depreciation, including using a software program
    such as QuickBooks. Here's how to calculate
    depreciation using QuickBooks
  • Open QuickBooks and create a new account.
  • Enter the purchase price (or original value) of
    the asset into the "Enter New Cost" field.
  • Enter the number of years the asset will be used
    in the "Years Used" field.
  • Enter the depreciation rate in the "Depreciation
    Rate" field (this will be determined by your tax
    brackets).
  • Click on the "Depreciation Schedule" button and
    select the type of depreciation you would like to
    use (straight line or declining balance).
  • Click on the "Calculate Depreciation" button and
    wait for the results to appear in the "Summary"
    window.
  • How to Calculate Depreciation using QuickBooks?
  • If you're like most business owners, you use
    QuickBooks to manage your finances. You probably
    use it to track your profits and losses, prepare
    your tax returns, and more. But did you know how
    to record depreciation expense in quickbooks?
    Depreciation is a tax deduction that businesses
    can claim on their taxable income. In this
    article, we'll show you how to calculate
    depreciation using QuickBooks.
  • First, open QuickBooks. Then, click the "File"
    menu option and select "Create Income Statement."
    On the Income Statement screen, click the
    "Depreciation" tab.

2
  • The first step in calculating depreciation is to
    identify the asset that you're depreciating. In
    most cases, this will be a physical asset (like a
    piece of equipment). However, if the asset is
    intangible (like copyright or trade secret
    rights), then you'll need to identify the
    underlying basis (the cost at which you acquired
    the right).
  • Once you've determined the asset's identification
    code and its underlying basis, you'll need to
    determine its depreciable period. This is simply
    how long the asset will be used before it can be
    written off as expenses. Generally speaking,
    assets that are used for short periods of
  • Tips for Calculating Depreciation
  • If you're thinking about how to record
    depreciation, QuickBooks can be a helpful tool.
    Here are five tips for using QuickBooks to
    calculate depreciation
  • Start by creating a new account in QuickBooks and
    importing your business data. This will give you
    a baseline for calculating depreciation.
  • Use the "Depreciation" report to track your
    depreciation expenses and expenses related to
    amortization of capitalized costs.
  • Use the "Entering Depreciation" wizard to
    calculate depreciation on new equipment,
    vehicles, and other depreciable assets.
  • Use the "recording depreciation for Property and
    Equipment" wizard to determine which expenses are
    deductible when calculating depreciation (such as
    research and development costs).
  • Review your calculations periodically to make
    sure you're accurately tracking your depreciation
    expenses and amortization of capitalized costs.
  • Conclusion
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