Fixed asset accounting and depreciation schedules

A written capitalization policy stating the dollar threshold and criteria for what counts as a fixed asset versus an ordinary expense, applied consistently to every purchase going forward. Book depreciation calculated on a documented method, typically straight-line, and posted on a set monthly or quarterly schedule rather than as one large year-end catch-up entry. A running reconciliation between book depreciation and whatever your tax preparer elects on the return, so the difference is understood rather than discovered. Disposal entries recording any gain or loss when an asset is sold or scrapped, and impairment entries when an asset's carrying value genuinely no longer reflects what it is worth.

We start by reviewing your existing fixed asset list, or building one from scratch if none exists, against the capitalization policy we set together. Each qualifying asset is assigned a useful life and depreciation method appropriate to its category, and posted to the general ledger on a fixed schedule that ties to your standard month-end close. At year end, or whenever your tax preparer needs it, we produce the reconciliation showing book depreciation against the tax depreciation elected for the return, with the difference explained line by line rather than left as an unexplained deferred tax adjustment.

Any business that regularly buys equipment, vehicles, computers, furniture, or makes leasehold improvements, and has never had a written policy for how those purchases get treated on the books. It particularly fits manufacturing and construction businesses with heavy equipment fleets, real estate operators depreciating buildings and improvements over long useful lives, and any growing business whose current approach is essentially ad hoc, capitalizing some purchases and expensing similar ones inconsistently depending on who processed the bill.

The most common problem is simple inconsistency: a $3,000 laptop expensed in January and a $2,000 laptop capitalized in June, with no policy behind either decision. The second is a fixed asset schedule that has not been updated in years, still carrying assets that were scrapped or sold long ago at full original cost. The third is book and tax depreciation running as two completely disconnected systems, so nobody can explain why book net income and taxable income differ by a specific amount. We fix all three: a written threshold applied going forward, a cleanup pass on the existing schedule to remove disposed assets, and a standing reconciliation that keeps book and tax depreciation connected rather than drifting apart.

We maintain fixed asset schedules directly inside QuickBooks Online, Xero, NetSuite, and Sage Intacct's fixed asset modules where available, or in a maintained schedule that posts summary depreciation entries into whichever general ledger system you run. For businesses with a large or complex asset base, we can work from a dedicated fixed asset subledger and reconcile its output into the general ledger each period rather than tracking every asset by hand inside the accounting software itself.

Fixed asset accounting is typically included as part of a broader accounting engagement at the Growth or Scale tier on the published US rate card at /us/pricing, since it depends on the same reviewed, closed ledger that full-service accounting maintains. A standalone engagement to set an initial capitalization policy and build a clean schedule from an existing, uncatalogued asset base is scoped separately as a one-time project. Ongoing maintenance is then folded into your regular monthly accounting fee.

Every depreciation schedule is checked each period against the general ledger balance it should tie to, and every asset on the schedule is checked at year end against whether it is still in service. Reconciliations between book and tax depreciation are reviewed for completeness before being handed to your tax preparer, so the numbers your preparer receives are already internally consistent rather than something they have to untangle themselves.

Setting an initial capitalization policy and threshold typically takes one to two weeks, including a review of recent purchases to see how they would have been treated under the proposed policy. Building a clean fixed asset schedule from an existing, disorganized asset base takes longer, generally two to four weeks depending on how many years of purchase history need to be reviewed and how complete the existing records are.