Onboarding and Managing Fixed Assets: A Guide to True-Up Entries

This guide aims to walk you through the process of onboarding fixed assets, specifically focusing on the true-up entry for depreciation. By the end of this guide, you will understand how to transition from manual to automated accounting for fixed assets using a specific software approach. This guide takes the example of three computers purchased in 2024 to illustrate the process.

In this example, we assume you have been accounting for your fixed assets, posting depreciation monthly. The assets in focus are three computers, each valued at $3,600, purchased in January, March, and June of 2024.

Each asset has a 36-month useful life, resulting in $100 of monthly depreciation per asset. The guide simplifies the example to make it easier to understand, but the same principles apply to more complex situations.

Since the purchase, $100 per month has been depreciated per asset. With the purchase of additional assets in March and June, the total monthly depreciation increased to $300 by September. This guide focuses on transitioning to an automated system from this point.

We aim to onboard all activities as of September, making it the first month for automated accounting. To facilitate this, you will close the manual accounting as of the end of July, allowing the software to post journal entries in August.

Post the manual journal entry for August to reflect the $300 depreciation. The software will then automatically calculate and post the accumulated depreciation, doubling it to the correct amount.

By the end of August, the accumulated depreciation balance should match the expected $1,700. If there is a discrepancy, post a journal entry to correct it. For example, if the balance is $3,400, reverse the difference to align with the expected figures.

This guide has shown you how to transition from manual fixed asset accounting to an automated system, focusing on true-up entries. By following these instructions and utilizing the software, you can efficiently manage your fixed assets and ensure accurate accounting records moving forward. The automated system will simplify audits and reviews by maintaining comprehensive historical data.