Setting Up Fixed Asset Manager in QuickBooks Desktop
How to configure Fixed Asset Manager in QuickBooks Desktop, from company file preparation through asset account creation and client import options for new and returning users.
QuickBooks Desktop ships with a built-in depreciation tool called Fixed Asset Manager, but getting it running requires more than flipping a switch. Users setting up FAM for the first time — or bringing a prior year’s depreciation schedules into a current company file — need to prepare the chart of accounts, configure tax-form settings, and choose the right client-creation path before the tool will calculate anything useful.
Preparing the Company File
FAM pulls key information from the QuickBooks company file, so that file has to be configured correctly first. The income-tax-form selection matters: FAM uses it to determine how depreciation flows into the return.
From the Company menu, open My Company, select the pencil icon, and choose Report Information. Pick the income tax form that matches the business structure and confirm. If the company file is brand new, the EasyStep Interview walks through this same selection during creation — the Detailed Start path exposes it; Express Start skips past it.
Building the Fixed Asset Accounts
Before FAM can track anything, the chart of accounts needs fixed-asset accounts structured in a specific way. The accepted approach is to create a parent account for each asset or asset group — a vehicle, a computer, furniture — and then add two subaccounts underneath each parent.
The first subaccount tracks cost. The second tracks accumulated depreciation. With this structure, the book value of any asset is visible at a glance by subtracting the accumulated depreciation balance from the cost balance on the parent account.
To create the parent, right-click in the Chart of Accounts, choose New, select Fixed Asset, and fill in the details. For each subaccount, repeat the process but check the “Subaccount of” box and select the parent. Save and close after each one.
Finally, create a separate expense account called Depreciation Expense — or whatever naming convention the business uses — so that periodic depreciation entries have a destination on the income statement.
Creating or Importing a FAM Client
Once the accounts are in place, open Fixed Asset Manager from within QuickBooks Desktop. FAM offers four ways to bring client data into the tool, and choosing the right one depends on whether this is a first-time setup or a continuation:
New client — The starting point for first-time users. Creates a fresh FAM client linked to the open company file.
Transfer a prior-year client — For returning users who need to roll last year’s asset schedules and accumulated depreciation into the current year. This is the path most businesses take at the start of a new fiscal year.
Reconnect an Accountant’s Review Copy — Brings current-year asset data into the company file when work was done in an accountant’s copy. Useful when a CPA has been managing depreciation separately.
Restore a FAM backup — Restores a backup created inside FAM itself (File > Backup). This is a distinct file type from a standard QuickBooks Desktop backup; the two are not interchangeable.
Configuring FAM Settings
After the client is created or imported, several configuration screens control how FAM behaves:
General — Displays company information pulled from the QuickBooks file. Verify that it carried over correctly.
Dates — FAM operates on a defined period, unlike QuickBooks Desktop itself. Enter the current-year beginning and ending dates that correspond to the financial statements being prepared. FAM uses these dates to automatically compute prior-year depreciation for assets entered mid-cycle. Those computed values can be overridden with figures from existing depreciation schedules if the numbers do not match.
Basis — Controls which tabs appear in the lower half of the asset-entry screen. Adjust this to match the information the business tracks.
Methods — Sets the default depreciation methods applied to newly created assets. Configuring the most commonly used methods here saves time during data entry, since each new asset will inherit these defaults rather than requiring manual selection.
Synchronization Between FAM and QuickBooks
FAM and QuickBooks Desktop exchange data, and the synchronization settings control which direction information flows. Users can configure whether changes in FAM push back to the QuickBooks company file, whether QuickBooks account balances feed into FAM, or both. Getting this right at setup avoids discrepancies between the depreciation schedules and the general ledger later.
For businesses dealing with a company file that has grown sluggish or unwieldy — a common complaint as years of asset data accumulates — condensing the file can improve responsiveness without losing historical depreciation records.
A Note on Year-End
FAM’s date-driven design means that when the configured period ends, users should follow the built-in year-end procedures to close out depreciation, update accumulated balances, and prepare the schedules for the next fiscal cycle. Skipping this step can leave prior-year figures frozen and current-year calculations incomplete.