Tag Archives: Depreciation

Fixed Assets

Fixed assets, which is a non-current asset, is a balance sheet account. The Plant and Machinery, Furniture and Fittings, Office Equipment, etc. are fixed assets.

It is common for small business accounting software not includes a fixed assets module; a module which allows the user to tracks and calculates depreciation of an individual asset automatically.

You can use a spreadsheet as a fixed assets register if the requirement is simple. Do consider a fixed asset management software if you have outgrown a ‘spreadsheet’ asset register or get a custom solution which tailors to your need. Tracking and reconciling assets can be a complicated process, especially when you have hundreds or thousand of them (and in multiple locations).

The asset, which you have purchased, need to update in both accounting software and the fixed assets register. It debits the fixed asset account and credits accounts payable or a bank account (depending on the transaction type or accounting method) when recording the transaction in an accounting system.

The spreadsheet (asset register) capture information such as the assets ID, date acquired, description, cost, depreciation, accumulated depreciation, and net book value. Optionally, you may include the serial number, supplier, supplier’s invoice date and reference number, warranty expiry date, asset location, who uses it, etc. (Do consult your accountant if you do not know how to create an asset register with a spreadsheet for your region).

Fixed Assets

Based on the fixed assets register, record the monthly or yearly depreciation via a general journal; it debits depreciation expense and credit accumulated depreciation account.

It may be good to have the asset register separated from the accounting system. When you changed accounting systems as your business grow or change of business model, it does not affect the asset register.

 

 

 

Depreciation

Software: MoneyWorks accounting software

MoneyWorks is accounting software. It does not have a built in Fixed Asset module, which tracks the purchase and allocation of asset, neither it has a depreciation calculator that tracks the monthly or yearly depreciation of its useful life.

The workaround method that you may consider using to track the purchases and allocation of asset is to enter a memo in the description field of the Purchase Invoice when the asset is purchased.

You may record the warranty information and the location (which department) and the user of the asset (if it is an office equipment such as a computer). The double entry for the Purchase Invoice transaction is debiting the Fixed Asset account and crediting Accounts Payable (You may also scan the original bill and warranty card into PDF and attach it to the Purchase Invoice for future reference).

A Journal will be used to track the depreciation of the asset. The double entry is debit Depreciation expense and credit Accumulated Depreciation account (Fixed Asset account type). Besides, you may also record the depreciation detail such as Asset name, Purchase Invoice number, years of depreciation, monthly or yearly depreciation amount (this information is useful in disposal of fixed asset or checking of warranty status).

Depreciation journal

Next, check the Make Recurring checkbox and set the recurring detail of this journal; such as next recurring date and recur for how much more time.

Recurring transaction