Tracking Additional Expenditures made to Improve an Asset in QuickBooks Enterprise 13.0.

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This article will discuss how to track additional expenditures made to improve an asset prior to selling it, as well as the sale.

Solution Description

Tracking purchase of the asset and improvements:

  1. Create an asset account to track the type of item (For Example: Used Cars, Spec Homes, House Flipping, etc.)
    1. Select the QuickBooks Lists menu and select Chart of Accounts.
    2. Select the Account option and select New. The Type should be Fixed asset
  2. Create a sub-account of that asset representing the specific car or home (we would recommend the sub-account being named after the VIN or street address).
    1. Select the QuickBooks Lists menu and select Chart of Accounts.
    2. Click on the Account tab and select New. Type should be Fixed asset.
    3. Select the sub-account of the main account
  3. Purchase the asset by creating a check payable to a vendor and offset to the asset sub-account.

Purchasing or paying for improvements on the asset:

  1. Create a check affecting the asset sub-account.
  2. Enter memo to identify what was actually purchased.

Tracking the sale of the asset:

  1. Create a non-inventory part to represent the asset being sold.
  2. Name the item after the asset account.
  3. Set account to the income account of your choice.
  4. Create invoice using the item setup in step 1 of tracking the sale.

Create a Journal Entry transferring the accumulated asset value to the COGS account:

QuickBooks 2006 and later:

  1. Select the QuickBooks Company menu and select Make General Journal Entry.
  2. Enter the date of sale as the Entry date.
  3. Credit the asset sub-account created in step 2 of tracking the purchase for the total balance of the account.
  4. Debit COGS.

Note: If desired, you can merge the sub-account back into the parent once the account is no longer needed.