Accounting

List equipment, vehicles and property as fixed assets and depreciate them every month.

Fixed Assets lists the equipment, vehicles and property the business keeps for more than a year, with what each cost, how much has been depreciated and what it is worth now. Depreciation spreads an asset's cost over the years it is used, as an expense, instead of all at once. Accounting enters each month's depreciation when the month ends, and Dispose takes an asset off the books when it is sold or scrapped.

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Add an asset

Record the purchase as usual, as a bill, an expense or a bank transaction, to Equipment or another account with the detail type Equipment or property. Then choose Add fixed asset and enter its name. Click a detail on the asset's page to change it.

Account: The account its purchase went to, such as Equipment.
Cost: What it cost in the books' currency: the same amount its purchase added to that account.
Depreciation starts: Usually the purchase date. The whole of that month is depreciated.
Assets from before the books start: Include it in the opening balances instead of recording a purchase, then add it to Fixed Assets. Its page shows the depreciation from before the books start, to enter in the opening balances.

Fixed Assets and Asset Tracker

Asset Tracker records each item the business has, such as a laptop or a van: its asset tag, where it is, its condition and who has it. Fixed Assets records its cost and depreciation in the books.

In Add fixed asset, choose an item from Asset Tracker as the name. It will be linked, and its purchase date and price will be brought in when the price is in the books' currency. The asset's page links to the item, and says so when the item is retired or lost in Asset Tracker; choose Dispose to take it off the books.

Depreciation methods

Method, on the asset's page, sets how its cost is spread over the months it is used.

Straight line: The same amount each month over the asset's Useful life, entered in years. The months add up exactly to its cost less its value at the end.
Declining balance: A yearly percentage of the value left (Rate a year), a twelfth of it each month, so the amount gets smaller over time.
Not depreciated: For land. Its value stays at its cost.
Value at the end: What the asset will be worth when the business stops using it, if anything. Depreciation stops at that value.

The monthly depreciation entry

Accounting enters each month's depreciation the next time it is opened after the month ends: one journal entry for every asset, dated the month's last day. The entry adds to Depreciation, an expense on Profit and Loss, and takes the same amount off the assets' value in Accumulated depreciation.

Changing an asset: Change an asset's cost, start date or method, and its earlier months will be entered again to match.
Closed periods: No entry can be dated in a closed period, so its months are not changed. The difference will be entered on the first open day.
Depreciation by year: The asset's page shows each financial year's depreciation and what the asset is worth at the year's end, including the years still to come.
Cash flow statement: Depreciation and the loss on a disposal are added back to net income, because neither moves cash. Investing activities show only equipment bought and sold.

Dispose of an asset

When the business sells, scraps or loses an asset, choose Dispose and enter the date. Its cost will come out of its account and its depreciation out of Accumulated depreciation, and what it was still worth will go to Gain or loss on disposals. It will not be depreciated for the month it was disposed of.

If it was sold, record the sale as usual, such as an invoice or a bank transaction, to Gain or loss on disposals. That account then shows the gain or loss: the sale price less what the asset was still worth.

Put back in use reverses a disposal, and the asset is depreciated again from the month it was disposed of. Remove takes an asset out of Fixed Assets and reverses its depreciation and disposal entries; its purchase stays in the books.

Add your first fixed asset.

Create a Magpie account, open Accounting and choose the date your books start, then choose Add fixed asset under Fixed Assets.

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