To enter a fixed asset you purchased, firstly you need to create the fixed asset.
- Go to Fixed Assets tab.
- Click New Fixed Asset button.
- Enter details of the fixed asset.
- Click Create button.
Once you create the fixed asset, you will notice the purchase cost is zero. This is because under double-entry accounting you cannot simply enter the purchase cost without entering the actual purchase or payment transaction.
Purchase of the fixed asset can be recorded under following tabs:
- Cash Accounts (if paid from cash in an account)
- Expense Claims (if paid by you or someone else on behalf of the business)
- Purchase Invoices (if purchased from a supplier on credit)
- Journal Entries (if purchase was financed by a loan)
When recording the purchase of a fixed asset under any of these tabs, categorize the amount spent to the Fixed assets account, then select the fixed asset you have purchased.
If you purchased the fixed asset using finance (e.g. car loan), you should also create the liability account in your Chart of Accounts before you record the value of the loan.
Then record the journal entry as a debit to the Fixed assets account for the purchase price and a credit to the loan account by the same amount. Loan repayments must be allocated to the loan account.