When starting the Fixed Assets System for a company, you must enter the existing data from the previous accounting system. The following activities must be performed when setting up the Fixed Assets System:
The three general ledger accounts that are associated with each fixed asset, i.e., general ledger controlling account, accumulated depreciation account and depreciation expense account, must have been entered when the general ledger chart of accounts was set up.
A general journal debit entry is made to the Fixed Asset controlling account for the total purchase cost of all the fixed assets. This is done at the time when the general ledger chart of accounts is set up.
Each fixed asset is entered into the fixed asset master file.
In the general journal, each fixed asset is debited for the amount of its purchase cost. The Fixed Asset controlling account is then credited for the amount of the total purchase cost for all the fixed assets.
The first two activities must have been done when the general ledger accounts were initially set up. The general journal entry that debits the controlling account for the total purchase cost of all the fixed assets should be made when the initial balances are being entered for the rest of the general ledger accounts. Refer to the set up chapter in the C/Books General Ledger Manual for detailed instructions on setting up general ledger accounts and entering initial balances.