Contra-Asset Account
How is a contra-asset
account setup? An accountant suggested it to me as a way to accumulate depreciation.
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a6UbhgLdmr34SKacfA8pyY
07/20/10 12:17pm PDT
Viewed by asker 01/20/11 2:16pm PST
Viewed by asker 01/20/11 2:16pm PST
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qbteachmt
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07/21/10 10:43am PDT
The solution
It is not a special account. It is how you use an account, that makes it "contra."
"Contra" indicates you make entries that are the opposite of what is typical. For instance, an Asset is purchased and it has value, so the account balance increases when there are new assts.
A depreciation account is going to hold negative entries, to decrease the value of the asset by the depreciation.
I like this structure:
Asset account (parent level) = Truck
Subaccount = Cost
Subaccount = Depreciation
Never post to the parent level account. Now the parent level shows the math that is the result of Cost minus Depreciation = current book value of Truck.
You can see this in the sample file. Every QB comes with one or more sample files. Open "product_based company" and this is Rock Castle Construction. They have trucks.
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07/28/10 8:46am PDT
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Thanks for the education, qbteach ... I'm getting there ...
