When you purchase something of a higher value and would like to capitalize it (not recognize the expense in one year), you will need to account for it as a fixed asset. Fixed assets are long-term, tangible pieces of property, plant, or equipment. Generally, a fixed asset must at least have a life of one year and is used in business operations.
When you capitalize it, two things happen. First, this item is added to your balance sheet and is presented as an asset. Second, this will be depreciated / amortized over a set period of time, which you will get to choose inside the software. Note that because you capitalize a fixed asset, this means that it will not be expensed fully in the year of purchases. So it's best to consider this and consult with your CPA on tax effects.
Now, to categorize a purchase as a fixed asset, follow these steps:
Open the expense transaction.
Under expense category, select the most appropriate such as Office Supplies, Equipment, Vehicles, Machinery, or you can create a new expense category. (Settings > Expense Categories > Add Custom Expense Category)
Under Duration of Usage, pick the appropriate life of your asset. If you choose:
I will only use this product this year: it will be expensed in the same year
This is a non-depreciating asset: It will remain in your Fixed Assets (Balance Sheet) with no depreciation recorded
3, 5, 7.... years: It will be presented as a Fixed Asset under your Balance Sheet, and will automatically be depreciated based on the life (number of years) you selectedSave!