Sounds like 1850 is the sum of an equal debit and credit for asset and amortization / depreciation / depletion.

cora said:

Will these two amounts zero out at the end of 2018?

Not automatically, the accounting software can't know what's happened to these assets, if anything.

Hello Randy

Chart of Accounts is as follows:

#1840 Computer Hardware (sub-group account)

#1845 Accum. Amort.- Computer Hardware (sub-group account)

#1850 Net - Computer Hardware (sub-group total) - currently at zero balance which is correct.

But like I said, # 1840 and #1845 continue to show (one as a debit and the other as a credit). Have I set up the Chart of Accounts incorrect?

Thanks.

C.

Yes (it's correct).  Sorry, I should say No, it is not incorrect.  The Sage 50 chart-of-accounts shows detail sub-accounts even if they add to zero.

cora said:

Have I set up the Chart of Accounts incorrect?

Randy has answered Yes to this question, but I would argue No is the correct answer.

Balance sheet accounts are cumulative and therefore unless you specifically post an entry to bring the account to zero, each account will continue with the same balance as the year before when moving between fiscal years.

As far as I know the only time you would zero out these accounts are if you dispose of all the asset(s) in the account.

Income statement accounts zero out at the beginning of a new year when transitioning to the new fiscal year.

As it happens, I have come across a few similar issues regarding these accounts.

At least I know my accounts are set-up correctly. My initial question is in reference to computer hardware, which such items depreciate rapidly.

If in essence the “net book value” of the Capital Asset is Zero, and it has already been (debited) to the ‘Depreciation Expense’ Account, would it be correct to (credit) Computer Hardware and (debit) Accum. Amortization in order to have it not appear on the Trail Balance i.e. scrap it off the books when it's no longer in use?

cora said:

i.e. scrap it off the books when it's no longer in use?

Yes.  If it's no longer in use, and it's effectively been disposed of, regardless of whether it's been depreciated to zero. 

Having been depreciated to zero only makes it very easy to record, since there's no gain or loss.

Sage won't do this automatically, because it doesn't know what's happened - whether items are still in use, and / or have been disposed of.

Thank you for your clarification.

C.