When you buy something your business will use for years, like equipment, a vehicle, a building, or land, you record it on your balance sheet as an asset instead of as an expense. How you record it depends on how you paid:
You paid in full (cash, check, card, or ACH)
You used a loan, and the lender paid the seller directly (the loan money never reached your bank account)
You used a loan, and the loan money was deposited into your bank account first, then you paid the seller
Bought the asset before your books started in Ambrook? See Setting Up Assets You Owned Before Starting Ambrook.
This video will also walk through the process!
Buying an asset outright
Step 1: Create the asset account
Go to Accounts and click New Account.
Choose the asset account type (for example, Equipment, Vehicle, Land, or Structure).
Set the Starting Date to the purchase date or a few days before.
Set the Starting Balance to $0.00.
Click Save.
Step 2: Tag the purchase as an Asset Adjustment
On the Ledger, find the purchase transaction. If you paid cash or the purchase isn't on your Ledger, click New → Transaction at the top of the Ledger and add it.
Click Category, then under Record on Balance Sheet, choose Asset Adjustment.
In the To field, select the asset account you just created.
Click Done.
The asset account's balance now equals what you paid.
Buying an asset with a loan (the lender paid the seller directly)
Example: You buy a $10,000 piece of equipment. You pay $2,000 down with your connected credit card, and a loan covers the other $8,000. The lender pays the dealer directly, so the $8,000 never shows up on your Ledger.
Step 1: Create the asset account and the loan account
Go to Accounts → New Account and create an asset account (for example, Equipment) with a Starting Balance of $0.00 and the purchase date as the Starting Date.
If your loan isn't connected to Ambrook, create a loan account the same way, also starting at $0.00 on the purchase date. If your loan is connected, skip this step; the loan account is already on your Accounts page.
Step 2: Record the loan and add it to the asset
If your loan account isn't connected:
Open the loan account and click Adjust Balance. Enter the amount you borrowed ($8,000) and the purchase date.
Open the loan account and choose View Transactions to find that adjustment on your Ledger.
Tag the adjustment as an Asset Adjustment to your new asset account.
If your loan account is connected:
Check the loan account's transactions for the $8,000 loan. If it's there, tag it as an Asset Adjustment to your new asset account and skip to Step 3.
If it isn't, click New → Transaction at the top of the Ledger. Choose the loan account, enter the amount you borrowed ($8,000) and the purchase date, and save.
Tag that transaction as an Asset Adjustment to your new asset account.
Step 3: Add the down payment to the asset
On the Ledger, find the $2,000 down payment.
Tag it as an Asset Adjustment to the same asset account.
Result: The asset shows $10,000, the full cost. The loan shows $8,000, what you owe. Skip step 3 if you didn't make a down payment.
Step 4: Tag your loan payments as they come in
Itemize each payment. Tag the principal as a Liability Adjustment to the loan and the interest to your interest expense category (for example, Non-Mortgage Interest). See Tagging Loan Payments for step-by-step instructions.
Step 5: Check your loan balance
Whenever you get a statement from your lender, compare it to the loan's balance in Ambrook. If they don't match, see Troubleshooting Loan Balances.
Buying an asset with a loan (the loan money was deposited first)
Example: You buy a $10,000 piece of equipment. The bank deposits an $8,000 loan into your connected checking account, and you write the dealer a $10,000 check (your $2,000 down payment plus the $8,000 loan).
Step 1: Create the asset account and the loan account
Create both with a Starting Balance of $0.00 and the purchase date as the Starting Date, the same way as in the section above.
Step 2: Tag the loan deposit
Find the $8,000 deposit on your Ledger and tag it as a Liability Adjustment to the loan account.
Step 3: Tag the purchase
Find the $10,000 check and tag it as an Asset Adjustment to the asset account.
Result: The asset shows $10,000 and the loan shows $8,000.
Steps 4 and 5: Tag your loan payments and check your loan balance, the same as in the section above.
Frequently Asked Questions
Can I include sales tax, delivery, or setup fees in the asset's cost?
Often, yes. Costs you paid to buy the asset and get it ready to use can be part of its cost. Tag those payments as Asset Adjustments to the same asset account. If they were financed, they're already included in the amount you borrowed. Check with your accountant.
I traded in my old equipment or vehicle toward this purchase.
I paid for the asset from my line of credit.
How do I record depreciation on the asset?
I followed the older version of these steps and tagged my down payment as a Liability Adjustment. Do I need to redo it?
No. Your asset and loan balances end up the same either way. Use the steps above for new purchases.
Always ask your accountant for guidance on how to treat your specific assets and loans.