Depreciating Fixed Assets

• Note: Before starting, make sure to activate the Chart of Accounts App in your account.

 

Depreciation is an accounting method used to determine the costs and expenses of using assets over their estimated useful life. Depreciation represents the value used or worn out from the asset, as the asset’s consumption and usage contribute to the company’s profit realization. It’s essential to allocate a portion of the usage expenses and costs every year out of the total years.

1. Click on “Accounting” from the main menu.
2. Click on “Assets”.
3. Click the button “Add Asset”.
4. Add the asset’s details. For more information on the nature of the required fields, refer to the guide “Add a new Asset”.
5. Enter the depreciation data for the asset:
   • In Service Date: Set the start date of the asset’s operation to begin calculating its depreciation.
   • Depreciation End Date: Set the end date of the asset’s depreciation.
   • Depreciation Method: Specify the depreciation system for the asset, choosing from:
     • Straight-Line: A fixed value is deducted from the asset when the depreciation period is due.
       • Period: Determine the interval for depreciation calculation by adding a number and selecting from “Day”, “Week”, “Month”.
       • Fixed Depreciation Value: Add the fixed depreciation value periodically deducted from the asset’s worth.
     • Declining-Balance (Percentage): Depreciation is calculated as a percentage of the current value of the asset and deducted at the depreciation calculation time.
       • Period: Determine the interval for depreciation calculation by adding a number and selecting from “Day”, “Week”, “Month”.
       • Depreciation Percentage: Specify the percentage deducted from the asset value periodically.
     • Units of Production: Determine a maximum number of units based on which the asset is depreciated.
       • Cost Per Unit: Specify the cost deducted when one unit of the asset is consumed.
       • Unit Name: Give a designation to the unit based on which the asset’s depreciation is calculated.
       • Total Asset Units: The maximum number of units after which the asset is fully depreciated.
     • Note: The fixed units system for depreciation is not automatically applied to the asset. Calculating the depreciation value and adding it manually within the asset file is required. For more details, refer to the guide “Manual Depreciation of Assets”.