{"id":157965,"date":"2026-10-28T08:49:15","date_gmt":"2026-10-28T08:49:15","guid":{"rendered":"https:\/\/docs.daftra.com\/?post_type=tutorial&p=157965"},"modified":"2026-11-10T13:29:51","modified_gmt":"2026-11-10T13:29:51","slug":"intangible-assets-recording-amortization-and-re-evaluation","status":"publish","type":"tutorial","link":"https:\/\/docs.daftra.com\/en\/tutorial\/intangible-assets-recording-amortization-and-re-evaluation\/","title":{"rendered":"Intangible Assets: Recording, Amortization, and Re-evaluation"},"content":{"rendered":"
\n

Intangible assets are assets that have no physical form but benefit your business for more than one year, such as software licenses, trademarks, patents, franchise rights, and goodwill. They’re recorded in the system from the Assets<\/strong> app in the same way as fixed assets, after you create a category account for them in the chart of accounts.<\/p>\n

Allocating the cost of an intangible asset over its life is called amortization<\/strong> in accounting, and it appears in the system as Depreciation<\/strong>; so everything about depreciation on the screens applies to amortizing an intangible asset.<\/p>\n

\n
Required permissions<\/span>Add New Assets<\/strong> to add the asset, and the permission to manage the chart of accounts to add the category account. They’re set from Manage Employee Roles<\/strong><\/a>.<\/span><\/div>\n
How to access<\/span>Direct link: Assets<\/strong><\/a>. Or from the main menu: Accounting<\/strong> \u2192 Assets<\/strong>.<\/span><\/div>\n<\/div>\n
\n

Contents<\/p>\n

    \n
  1. Step 1: Add the intangible assets account<\/strong><\/a><\/li>\n
  2. Step 2: Add the intangible asset<\/strong><\/a><\/li>\n
  3. Choose the amortization method<\/strong><\/a><\/li>\n
  4. Practical example<\/strong><\/a><\/li>\n
  5. Accounts created automatically<\/strong><\/a><\/li>\n
  6. Journal entries<\/strong><\/a><\/li>\n
  7. Automatic and manual amortization<\/strong><\/a><\/li>\n
  8. Impairment of the asset (re-evaluation)<\/strong><\/a><\/li>\n
  9. Selling the asset or its expiry (write-off)<\/strong><\/a><\/li>\n
  10. Common problems and solutions<\/strong><\/a><\/li>\n
  11. Important notes<\/strong><\/a><\/li>\n
  12. Frequently asked questions<\/strong><\/a><\/li>\n<\/ol>\n<\/div>\n

    Step 1: Add the intangible assets account<\/h2>\n

    The Category Account<\/strong> field in the asset form shows only the accounts under Fixed Assets Accounts<\/strong> (such as Furniture and Fixtures, Equipment, Vehicles, Buildings, and Land). In accounts that don’t have Fixed Assets Accounts<\/strong>, it shows the accounts under Fixed Assets<\/strong>. So add a category account for intangible assets there once:<\/p>\n

      \n
    1. Open the Chart of Accounts<\/strong><\/a>.<\/li>\n
    2. Go to Assets<\/strong> \u2192 Fixed Assets<\/strong> \u2192 Fixed Assets Accounts<\/strong>. If you can’t find it, stay in Fixed Assets<\/strong>.<\/li>\n
    3. Click Add Account<\/strong>, and choose Main Account<\/strong>.<\/li>\n
    4. Enter the name, such as Intangible Assets<\/strong>, choose the type Debit<\/strong>, then click Save<\/strong>.<\/li>\n<\/ol>\n
      \n

      Result:<\/p>\n

      Intangible Assets<\/strong> appears under Fixed Assets Accounts<\/strong>, and the system automatically creates a matching main account named Accumulated Depreciation – Intangible Assets<\/strong> under Accumulated Depreciation<\/strong>, to accumulate the amortization of these assets.<\/div>\n<\/div>\n
      \n

      \ud83d\udec8<\/span><\/p>\n

      Note:<\/strong> You can add more specific main accounts under Intangible Assets<\/strong>, such as Software and Licenses<\/strong> and Trademarks<\/strong>; all accounts under Fixed Assets Accounts<\/strong> appear in the Category Account<\/strong> field.<\/p>\n<\/div>\n

      \n

      \u26a0<\/span><\/p>\n

      Warning:<\/strong> If you add the account somewhere else in the chart, such as under Current Assets<\/strong> or Accumulated Depreciation<\/strong>, it won’t appear in the Category Account<\/strong> field when you add the asset.<\/p>\n<\/div>\n

      Step 2: Add the intangible asset<\/h2>\n
        \n
      1. Open Assets<\/strong><\/a> and click Add Asset<\/strong>, or open Add Asset<\/strong><\/a> directly.<\/li>\n
      2. Fill in the fields as in the following table, then click Save<\/strong>; the message Asset has been saved<\/strong> appears and you move to the asset page.<\/li>\n<\/ol>\n

        Basic information<\/h3>\n\n\n\n\n\n\n\n\n\n\n
        Field<\/th>\nWhat to enter for an intangible asset<\/th>\nRequired<\/th>\n<\/tr>\n
        Name<\/strong><\/td>\nThe asset name, such as: Accounting software license. It can’t be repeated for another asset.<\/td>\nYes<\/td>\n<\/tr>\n
        Code<\/strong><\/td>\nThe asset code.<\/td>\nYes<\/td>\n<\/tr>\n
        Category Account<\/strong><\/td>\nChoose Intangible Assets<\/strong> or the more specific account under it.<\/td>\nYes<\/td>\n<\/tr>\n
        Useful Life<\/strong><\/td>\nThe period of benefit from the asset in Years<\/strong> or Months<\/strong>, such as the license period or the trademark protection period. With Straight-Line<\/strong>, the amortization amount is calculated from it automatically.<\/td>\nNo<\/td>\n<\/tr>\n
        In Service Date<\/strong><\/td>\nThe date the asset starts being used. It can’t be before the Purchase Date<\/strong>.<\/td>\nYes<\/td>\n<\/tr>\n
        Quantity<\/strong><\/td>\nUsually leave it at 1.<\/td>\nNo<\/td>\n<\/tr>\n
        Physical Location<\/strong>, Used By<\/strong>, Serial Number<\/strong>, and Barcode<\/strong><\/td>\nFields for physical assets; you can leave them empty. You can enter the license number in Serial Number<\/strong>.<\/td>\nNo<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        Purchase details<\/h3>\n\n\n\n\n\n\n\n
        Field<\/th>\nWhat to enter for an intangible asset<\/th>\nRequired<\/th>\n<\/tr>\n
        Purchase Price<\/strong> and currency<\/td>\nThe asset cost, such as the license price or the trademark registration fees.<\/td>\nYes<\/td>\n<\/tr>\n
        Purchase Date<\/strong><\/td>\nThe date of the purchase entry. It can’t be in a closed period.<\/td>\nYes<\/td>\n<\/tr>\n
        Cash Account<\/strong><\/td>\nThe account the cost was paid from, such as the treasury or bank. If the purchase is on credit, choose the supplier’s account.<\/td>\nYes<\/td>\n<\/tr>\n
        Tax 1<\/strong> and Tax 2<\/strong><\/td>\nThe purchase tax, if any. An inclusive tax isn’t included in the asset cost.<\/td>\nNo<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        Asset depreciation<\/h3>\n\n\n\n\n\n\n\n\n\n\n\n
        Field<\/th>\nWhat to enter for an intangible asset<\/th>\nRequired<\/th>\n<\/tr>\n
        Depreciation Method<\/strong><\/td>\nThe amortization method; most intangible assets use Straight-Line<\/strong>. (Details<\/strong><\/a>)<\/td>\nYes<\/td>\n<\/tr>\n
        Salvage Value<\/strong><\/td>\nThe remaining value at the end of its life, usually 0 for intangible assets.<\/td>\nNo<\/td>\n<\/tr>\n
        Auto Depreciation Frequency<\/strong><\/td>\nHow often an amortization entry is recorded, in Month<\/strong>, Day<\/strong>, or Week<\/strong>, such as every 1 month.<\/td>\nYes, with Straight-Line and Declining-Balance<\/td>\n<\/tr>\n
        Depreciation Amount \/ 1 Month(s)<\/strong><\/td>\nCalculated automatically: (Purchase Price \u2212 Salvage Value) \u00f7 Useful Life \u00d7 Frequency. You can edit it.<\/td>\nYes, with Straight-Line<\/td>\n<\/tr>\n
        Depreciation Percentage \/ 1 Month(s)<\/strong><\/td>\nA percentage of the asset’s current value.<\/td>\nYes, with Declining-Balance<\/td>\n<\/tr>\n
        Start Depreciation Auto Date<\/strong><\/td>\nThe date of the first amortization entry. It can’t be before the In Service Date<\/strong>.<\/td>\nYes, with Straight-Line and Declining-Balance<\/td>\n<\/tr>\n
        Depreciation End Date<\/strong><\/td>\nThe end date of the license or right; amortization stops after it.<\/td>\nNo<\/td>\n<\/tr>\n
        Accumulated Depreciation Account<\/strong> and Depreciation Expense Account<\/strong><\/td>\nLeave them empty so the system creates an account for the asset, or choose an existing account.<\/td>\nNo<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        Choose the amortization method<\/h2>\n\n\n\n\n\n\n\n
        Method in the system<\/th>\nWhen to use it for an intangible asset<\/th>\nRequired fields<\/th>\n<\/tr>\n
        Straight-Line<\/strong><\/td>\nThe most common: a license or right for a fixed period whose benefit is spread evenly.<\/td>\nAuto Depreciation Frequency<\/strong>, Depreciation Amount<\/strong>, Start Depreciation Auto Date<\/strong><\/td>\n<\/tr>\n
        Declining-Balance (Percentage)<\/strong><\/td>\nIf the asset’s benefit is greater in its first years.<\/td>\nAuto Depreciation Frequency<\/strong>, Depreciation Percentage<\/strong>, Start Depreciation Auto Date<\/strong><\/td>\n<\/tr>\n
        Units of Production<\/strong><\/td>\nIf the benefit is linked to usage, such as a license for a set number of units or users.<\/td>\nCost Per Unit<\/strong>, Unit Name<\/strong>, Asset Total Units<\/strong><\/td>\n<\/tr>\n
        Without Depreciation<\/strong><\/td>\nAssets with an indefinite life, such as goodwill or a trademark that’s renewed continuously.<\/td>\nNone<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
        \n

        \ud83d\udec8<\/span><\/p>\n

        Note:<\/strong> With Units of Production<\/strong>, amortization isn’t recorded automatically; you record it manually from Add Manual Depreciation<\/strong> with the number of units used.<\/p>\n<\/div>\n

        Practical example<\/h2>\n
        \n

        A 3-year software license:<\/p>\n

        You bought a software license for 36,000 from the bank, and the license period is 3 years.
        \nCategory Account<\/strong>: Intangible Assets \u2014 Useful Life<\/strong>: 3 years \u2014 Purchase Price<\/strong>: 36,000 \u2014 Cash Account<\/strong>: Bank
        \nDepreciation Method<\/strong>: Straight-Line \u2014 Salvage Value<\/strong>: 0 \u2014 Auto Depreciation Frequency<\/strong>: 1 Month
        \nThe Depreciation Amount \/ 1 Month(s)<\/strong> is calculated automatically: 36,000 \u00f7 36 months = 1,000.
        \nWhen you save, a purchase entry of 36,000 is recorded, then an amortization entry of 1,000 every month until the current value reaches zero after 36 months.<\/div>\n<\/div>\n

        Accounts created automatically<\/h2>\n\n\n\n\n\n\n
        Account<\/th>\nWhere it is in the chart of accounts<\/th>\nUse<\/th>\n<\/tr>\n
        (Asset name)<\/strong><\/td>\nUnder the selected category account, such as Intangible Assets.<\/td>\nThe asset cost.<\/td>\n<\/tr>\n
        Accumulated Depreciation – (Asset name)<\/strong><\/td>\nUnder Accumulated Depreciation – Intangible Assets<\/strong> in Accumulated Depreciation<\/strong>.<\/td>\nThe total recorded amortization.<\/td>\n<\/tr>\n
        Depreciation Expense – (Asset name)<\/strong><\/td>\nUnder Depreciation Expense<\/strong>.<\/td>\nThe amortization expense in the income statement.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
        \n

        \ud83d\udec8<\/span><\/p>\n

        Note:<\/strong> The accumulated and expense accounts are created only if you leave the Accumulated Depreciation Account<\/strong> and Depreciation Expense Account<\/strong> empty. You can open the asset account from the account link at the top of the asset page.<\/p>\n<\/div>\n

        Journal entries<\/h2>\n\n\n\n\n\n\n\n\n\n
        Operation<\/th>\nDebit<\/th>\nCredit<\/th>\n<\/tr>\n
        Purchase<\/strong><\/td>\nThe asset account (at cost without tax) + the tax account, if any<\/td>\nCash Account<\/strong><\/td>\n<\/tr>\n
        Amortization<\/strong><\/td>\nDepreciation Expense – (Asset name)<\/td>\nAccumulated Depreciation – (Asset name)<\/td>\n<\/tr>\n
        Sell<\/strong><\/td>\nThe account receiving the price + accumulated depreciation<\/td>\nThe asset account, with the difference as a gain or loss in Capital Gains & Loss<\/strong><\/td>\n<\/tr>\n
        Write off<\/strong><\/td>\nThe selected account at the current value + accumulated depreciation<\/td>\nThe asset account at cost<\/td>\n<\/tr>\n
        Re-evaluate<\/strong> (decrease)<\/td>\nThe Revaluation<\/strong> account or the selected account<\/td>\nThe asset account<\/td>\n<\/tr>\n
        Re-evaluate<\/strong> (increase)<\/td>\nThe asset account<\/td>\nThe Revaluation<\/strong> account or the selected account<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        The book value of the intangible asset in the balance sheet = the asset account balance \u2212 the balance of its accumulated depreciation account.<\/p>\n

        Automatic and manual amortization<\/h2>\n