User Support Forum

I understand that depreciation is debited to a Depreciation expense account and credited to an Accumulated Depreciation asset account. My question is how to handle it in the Net Assets section. I've been told that the Depreciation expense account closes to Unrestricted Net Assets the same as any other expense, but that seems to have the potential for illogical results. Our Unrestricted Net Assets account is quite small; most of our net assets are in building equity or donor restricted funds. The cumulative effect of closing annual depreciation to Unrestricted Net Assets could be to reduce that account to zero or below, even when we continue to have unrestricted cash on hand! Shouldn't depreciation show up as a reduction to the type of net asset being depreciated--building, furnishings, equipment, etc.? These are also in the unrestricted group within net assets but not in the same detail account as Unrestricted Net Assets.