Asset depreciation for unpaid purchase

I could not find any query on the forum similar to it.
I am using my existing laptop (asset) for my new startup which I did not purchase from my business cash or bank account.

I would like to have this asset cost depreciated over my business to recover the cost. I am aware about the asset deprecation in manager and have done it for other assets however, could you advise how to achieve my requirement of depreciation of an asset without a purchase?


Two options.

  1. although its a new business, you should probably enter the same as a starting balance.
    you can follow the below guide although you would not have to enter the depreciation as explained there.

  2. you can setup a capital account and enter the purchase of the asset as an expense claim.

these are just my suggestions. i would recommend to wait for other forum members to respond who are knowledgeable in accounting than i am.

You should check with a qualified local accountant or your tax authority first, to determine whether depreciation of assets converted from personal to business use can be depreciated. If so, you should also seek guidance on what the basis of the converted asset should be. It is very unlikely you can depreciate the full cost of the laptop.

If permitted, it is questionable whether the migration approach suggested by the link @sharpdrivetek provided would be the right one, because, since you have a new startup, there was no prior accounting system to migrate from. If there had been, that is where acquisition of the laptop would have been reflected. Since there wasn’t, the value of a new business asset must come from somewhere. In this case, it is an in-kind contribution from a founder of the business.

A better approach is to use a journal entry. Debit Fixed assets and the laptop’s sub-register, either for the full purchase price or some reduced value, in accordance with local requirements. Credit an equity account, such as Owner’s equity or a capital account, depending on your form of organization, by the same amount. Now, the increase in overall asset value of the business will be balanced by the increase in equity. From an accounting perspective, the end result will be the same as if you contributed additional capital that was immediately used to purchase the laptop (for the business as buyer from you as seller) at the price allowed by local regulations for the conversion. You will have that much more invested in the business, and the business will have that much more in assets.

Another way to accomplish the same thing is for the business to literally buy the laptop from you using an ordinary payment from the business bank account. A third way is to record acquisition of the laptop via an expense claim, with you as the expense claim payer. What all three methods have in common is that they balance the debit (increase) to assets with a credit from either a reduction to another asset account (in the case of the outright purchase) or an increase to an equity (for the journal entry) or liability (for an expense claim) account. That way, the laptop’s asset value is not appearing by magic on your books.