Setting up fixed asset tracking and depreciation in QuickBooks requires different approaches depending on whether you're using QuickBooks Desktop or QuickBooks Online. The process involves creating dedicated asset accounts, recording purchase details, selecting depreciation methods, and maintaining accurate records through journal entries. QuickBooks Online Advanced and QuickBooks Desktop both offer specialized tools like Fixed Asset Manager (FAM) to automate calculations, though manual setup remains essential for accuracy.

Key findings from the sources:

• QuickBooks Desktop uses Fixed Asset Manager (FAM) for comprehensive depreciation tracking, requiring setup of income tax forms, G/L accounts, and client information ^[6]
• QuickBooks Online requires manual creation of asset accounts and depreciation subaccounts, with journal entries to record value loss ^[4][8]
• Both versions emphasize consulting an accountant for proper depreciation methods and tax compliance ^[1][7]
• Automated depreciation scheduling is available in QuickBooks Online Advanced ^[2][5]

Fixed Asset Tracking and Depreciation Setup in QuickBooks

Setting Up Asset Accounts and Initial Configuration

The foundation of fixed asset management begins with proper account setup in your Chart of Accounts. QuickBooks distinguishes between current assets (short-term) and fixed assets (long-term), with depreciation requiring dedicated subaccounts. In QuickBooks Desktop, you'll work through the Fixed Asset Manager (FAM) interface, while QuickBooks Online requires manual account creation.

For QuickBooks Desktop users, the process starts by opening FAM and configuring client information. The system requires you to set up an income tax form (typically Form 4562) to properly track depreciation for tax purposes ^[6]. You must then create General Ledger (G/L) accounts specifically for:

• The asset's original cost
• Accumulated depreciation
• Depreciation expense
• Asset disposal accounts ^[6]

The setup wizard guides you through either minimal account creation (just the essentials) or an ideal setup with all recommended accounts ^[6]. QuickBooks Online users should first verify if depreciation accounts already exist by filtering the Chart of Accounts for "depreciation" terms ^[4]. If none exist, create a new account under "Other Expenses" with "Depreciation" as the detail type ^[8].

Key configuration steps include:

• In QuickBooks Desktop: Navigate to Lists > Chart of Accounts > New to create fixed asset accounts ^[1]
• Select "Fixed Asset" as the account type and name it appropriately (e.g., "Office Equipment")
• Create a subaccount for accumulated depreciation by selecting "Is subaccount" and linking to the main asset account ^[1]
• For QuickBooks Online: Go to Settings ⚙ > Chart of Accounts > New > Other Account Types > Fixed Asset ^[4]
• The system recommends using the account number 15000-15999 for fixed assets and 16000-16999 for accumulated depreciation ^[1]

Recording Fixed Assets and Depreciation Methods

Once accounts are established, recording the actual fixed assets involves entering purchase details and selecting appropriate depreciation methods. In QuickBooks Desktop's Fixed Asset Manager, you'll add assets through the Fixed Asset Item List, entering critical information including:

• Purchase price and date
• Asset description and classification
• Expected useful life
• Salvage value
• Depreciation method (straight-line, declining balance, etc.) ^[3][7]

The depreciation method selection significantly impacts financial reporting. Common methods supported include:

• Straight-line method: Equal depreciation amounts each year (e.g., $10,000 asset over 5 years = $2,000 annual depreciation) ^[10]
• Declining balance method: Higher depreciation in early years (e.g., 150% or 200% of straight-line rate) ^[10]
• Units of production: Depreciation based on actual usage or output ^[10]
• Section 179 deduction: Immediate expensing for qualifying assets ^[7]

QuickBooks Online users must manually create journal entries to record depreciation, typically debiting the Depreciation Expense account and crediting the Accumulated Depreciation account ^[8]. The process involves:

• Navigating to + New > Journal Entry
• Selecting the depreciation expense account
• Entering the calculated depreciation amount
• Choosing the accumulated depreciation subaccount
• Adding a memo with asset details and depreciation period ^[8]

For automated tracking in QuickBooks Online Advanced, the system allows scheduling depreciation for multiple assets simultaneously. The video tutorials demonstrate adding assets in bulk and setting up recurring journal entries to automatically post depreciation at specified intervals ^[2][5]. This automation requires:

• Selecting the depreciation start date
• Choosing the frequency (monthly, quarterly, annually)
• Specifying the depreciation amount or percentage
• Assigning the appropriate accounts for debit/credit ^[2]

Critical considerations for all users include:

• Maintaining records of prior depreciation amounts when adding existing assets ^[3]
• Ensuring asset disposal records reflect both the sale price and accumulated depreciation ^[7]
• Verifying that depreciation calculations align with IRS guidelines to avoid penalties ^[7][10]
• Consulting with accounting professionals when uncertain about method selection or tax implications ^[1][8]