How to Record the Purchase of a Fixed Asset

When you buy a fixed asset — a computer, vehicle, piece of equipment — you don't record it as an expense. You record it as an asset on your Balance Sheet. It gets expensed gradually over time through depreciation (CCA for tax purposes).

What You'll Need

Access to QuickBooks Online
The purchase amount, date, and payment method
The asset already set up as an account in your Chart of Accounts (your Mesa CPA bookkeeper can add it if it's not there)

Normal Procedure

Step 1: Confirm It's a Fixed Asset, Not an Expense

Before recording, confirm the purchase qualifies as a fixed asset:

It will be used for more than one year
It has meaningful value (generally over ~$500, though your bookkeeper will advise the threshold for your business)

If it's below the threshold or will be fully consumed this year, record it as an expense instead.

Step 2: Record the Purchase in QBO

If you paid immediately (by bank transfer, cheque, or card):

Go to + New > Expense.
In the Payment account field, select the account you paid from.
In the Category field, select the appropriate fixed asset account from your Chart of Accounts (e.g., "Computer Equipment," "Vehicles," "Office Equipment"). If it doesn't exist, ask your Mesa CPA bookkeeper to add it.
Enter the full purchase amount (before GST/HST).
Apply the correct GST/HST so your input tax credit is captured.
Save.

If you're paying over time (financed purchase or loan):

This is more complex — the asset is recorded at its full value, and the loan is recorded as a liability. Ask your Mesa CPA bookkeeper to set this up the first time to ensure it's structured correctly.

Step 3: Attach Documentation

Attach the purchase invoice or receipt to the transaction in QBO. For significant assets, also keep:

The original purchase invoice
Serial numbers or asset identification
Warranty documents

Abnormal Procedures

You're not sure whether to expense or capitalize the purchase.

Default to asking your Mesa CPA bookkeeper. The general threshold is ~$500, but the actual decision depends on the nature of the item and your business. It's better to ask than to fix a misclassification later.

You purchased the asset personally and the corporation is using it.

This needs to be handled carefully. Options include: the corporation reimbursing you (shareholder loan credit), or a formal sale of the asset to the corporation at fair market value. Talk to your Mesa CPA advisor — the approach depends on the value and type of asset.

The asset was part of a bundled purchase (multiple items on one invoice).

Break out each asset separately in QBO, especially if they fall into different CCA classes for tax purposes. Computers and vehicles, for example, have very different CCA rates — combining them in one asset account would cause your CCA calculations to be wrong.

FAQ

Does the full purchase price go on my Profit & Loss?

No. The purchase price goes on the Balance Sheet as an asset. Only the depreciation (CCA) taken each year reduces your income over time. This is fundamentally different from an expense, which hits your P&L immediately.

What CCA class does my asset belong to?

CCA classes are set by the CRA and determine how quickly an asset can be depreciated for tax purposes. Common classes:

Class 10/10.1: Vehicles (30%)
Class 8: Miscellaneous equipment, including most office equipment (20%)
Class 50: Computer hardware (55%)
Class 10: Data network equipment (30%)

Your Mesa CPA advisor determines CCA classes at year-end — you don't need to track this day-to-day.

Can I claim the full cost of an asset in year one instead of depreciating it?

In some cases yes, through the Immediate Expensing deduction available to CCPCs and other eligible businesses. This is a tax planning decision, not a bookkeeping one — ask your Mesa CPA advisor at year-end.

What if I buy a used asset?

Used assets are recorded the same way as new ones — at the price you paid. CCA rules for used assets are the same as new in most CCA classes.