Assets

4.3.2 Asset Depreciation

To record depreciation of assets, go to Journals on Mclowd’s Settings Menu.

SettingsMenu_journal

Click the ADD NEW JOURNAL ENTRY button.

Mclowd’s Chart of Accounts provides three Depreciation Expense Accounts:

Depreciation Expense Accts

and three Depreciation Investment Accounts:

Depreciation Investment Accounts

To correctly record asset depreciation, your journal entry should debit the relevant expense account (creating a tax deductible expense) and credit the relevant investment account (reducing the value of the asset).

For example, to depreciate a building showing an asset value of $325,000 by 5%, create a journal entry as follows:

Depreciate building

Your accounts will show a $16,250 expense and a new asset value of $308,750.

To record depreciation of fixtures and fittings, create a journal as follows:

Depreciate fittings and fixtures

debiting 5-1070-05 and crediting 1-1170-05.

Similarly, to depreciate plant and machinery, create a journal entry debiting account 5-1070-05 and crediting 1-1170-06.
 


about the author:

Lorraine Cobcroft

With a background in accounting and financial management, followed by two decades writing software documentation, Lorraine joined the Mclowd team in mid-2016 and is enjoying working with a dynamic team to enhance an innovative product that has the potential to revolutionize the way Australians manage their retirement funding.
Lorraine is also an accomplished business writer, ghost-writer, novelist and short-story writer and poet.

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