How do I depreciate real property?

mgzarate1
mgzarate1 Quicken Windows 2017 Member ✭✭
in Business and Rental Property Tools (Windows)
Can someone help? tried to create a liability account for depreciation, but in my reports depreciation shows as a negative number

Best Answers

  • Tom Young
    Tom Young Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Answer ✓
    Well, depreciation is a "negative number" when it comes to calculating your net worth.  The accounting is
    Debit (increase) Depreciation Expense (a Category)
    Credit (increase) Accumulated Depreciation (an Account)
    Most commonly Accumulated Depreciation is a "contra" Account, an Account that's on the asset side of the balance sheet but is expected to have a negative number.
    If your recorded transactions for depreciation are in line with the accounting shown above, then that's proper.
  • GeoffG
    GeoffG Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Answer ✓
    NotACPA said:

    I'm not a business and I don't need to show the accumulated depreciation ... just the current value of the property.
    Totally agree. Unless a H&B user, there is no reason to over complicate simple depreciation and the Net Worth and reporting work just fine.

    3uVg3ypwQR.png

Answers

  • Tom Young
    Tom Young Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Answer ✓
    Well, depreciation is a "negative number" when it comes to calculating your net worth.  The accounting is
    Debit (increase) Depreciation Expense (a Category)
    Credit (increase) Accumulated Depreciation (an Account)
    Most commonly Accumulated Depreciation is a "contra" Account, an Account that's on the asset side of the balance sheet but is expected to have a negative number.
    If your recorded transactions for depreciation are in line with the accounting shown above, then that's proper.
  • GeoffG
    GeoffG Quicken Windows Subscription SuperUser ✭✭✭✭✭
    The method I use is to decrease the asset account directly. Quicken allows for one sided entries. The example below illustrates how this can be done. The frequency is however you choose.
    I have set all depreciated assets with a reminder at various frequencies depending on the asset.
    3uVg3ypwQR.png
  • NotACPA
    NotACPA Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Technically, that's a self-referencing entry ... not "one sided".  But that IS the method that I use also.

    Q user since February, 1990. DOS Version 4
    Now running Quicken Windows Subscription, Business & Personal
    Retired "Certified Information Systems Auditor" & Bank Audit VP

  • mgzarate1
    mgzarate1 Quicken Windows 2017 Member ✭✭
    Thank you so much for your help, I could not understand why in my reports it would show as a negative number in the outflows section and why my net worth is almost zero
  • Tom Young
    Tom Young Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Mechanically a self-referencing entry in Quicken isn't a one-sided entry at all but instead follows double-entry accounting rules as the other side of the entry, the one that you can't see, is a direct entry to your net worth (equity) "Account." 
    But I don't understand why you'd resort to a self-referencing entry to account for depreciation.  Depreciation is an expense as real as an expense associated with writing a check.  To reconcile your changes in equity over a period, which ordinarily would track your "Overall Total" in a Spending report, you'd have to "plug" any self-referencing entries during the period to make that work.
  • mgzarate1
    mgzarate1 Quicken Windows 2017 Member ✭✭
    Thank you, I like the idea of creating 2 asset accounts and depreciating on one, that way it will show depreciation as a deduction and if I like to find out my net worth I will just not include the depreciation account, Do you think that will work?
  • Tom Young
    Tom Young Quicken Windows Subscription SuperUser ✭✭✭✭✭
    That will work fine.  With a new depreciable asset the accumulated depreciation Account would start at $0 and then grow (negatively) as you recognize depreciation expense.  If you want to start this with the asset you've already been depreciating then create the accumulated depreciation Account with a $0 opening balance and simply transfer in the balance from your current liability Account.


  • NotACPA
    NotACPA Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Why?  K.I.S.S.
    I'm not a business and I don't need to show the accumulated depreciation ... just the current value of the property.
    Since I always use the same notation for depreciation, If I ever needed to see the accumulated sum I could just do a report for that "payee".

    Q user since February, 1990. DOS Version 4
    Now running Quicken Windows Subscription, Business & Personal
    Retired "Certified Information Systems Auditor" & Bank Audit VP

  • GeoffG
    GeoffG Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Answer ✓
    NotACPA said:

    I'm not a business and I don't need to show the accumulated depreciation ... just the current value of the property.
    Totally agree. Unless a H&B user, there is no reason to over complicate simple depreciation and the Net Worth and reporting work just fine.

    3uVg3ypwQR.png
  • mgzarate1
    mgzarate1 Quicken Windows 2017 Member ✭✭
    Thank you that really helped, for some reason in all the new asset accounts that I created the action button and the clock are missing, can anyone help with this issue?
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