Assets
Managing fixed assets efficiently is crucial for maintaining accurate financial records and ensuring compliance with accounting standards. Our system provides a streamlined process for adding, tracking, depreciating, and disposing of fixed assets, making asset management simple and intuitive. This guide walks you through the essential steps to ensure assets are properly recorded, depreciated, and disposed of when necessary.
Adding a fixed asset
Navigate to the ‘Assets’ section
Click the 'Add' button to create a new fixed asset.
Asset details
A window will open where you can input essential information about the asset. The system will automatically generate a reference number for the asset, which can be edited if necessary. Select purchase date, account to journalise, purchase price (excluding VAT) and VAT rate.
Select payment details
Choose the payment method, supplier, and VAT details from the dropdown menu.
Payment method - From the dropdown, you can select either supplier or bank. Where the same is already paid, you would ideally select the bank option from this dropdown and then mention both the supplier as well as the bank, so that we can make payment entries instantly. This creates both a purchase invoice as well as payment. Where the supplier is selected from the dropdown, you just need to mention the supplier's name.
Supplier - The contact person from whom the asset is bought. You can create a new contact by starting to type and clicking on create supplier.
Bank account (if any) - User would be selecting the particular bank account through which payment of the asset is made.
Additional information
Description- Use the description section to add further details. You can also attach files by clicking on the attachment icon.
Input depreciation information
Toggle switch- Use the toggle to indicate whether the asset should be depreciated. If depreciation is enabled, input the relevant depreciation information:
P&L account type - The depreciation expense for the asset needs to be treated as what type of expense: cost of sales (for assets that serve as direct costs a business incurs to produce the goods or services it sells), administrative (for assets that serve as the ongoing costs of running a business that are not directly related to producing or selling goods or services) or selling and distribution costs (for assets that serve the purpose of marketing, selling, and delivering the products or services to customers).
Method - Method of depreciating an asset could either be written down value method or straight line method. Written down value method is used when depreciation is calculated by applying a fixed percentage to the asset's decreasing book value each year. Straight line method is used where an asset's cost is evenly distributed over its useful life.
Rate/ Years - Enter rate in percentage or number of years depending upon method of depreciation.
Start date - Mention the date from which depreciation needs to be applied on this particular asset.
Accumulated depreciation - Where an asset is already depreciated from a certain period, the amount of depreciation already applied can be entered here.
Click on 'Save' to proceed forward.
Note: A corresponding purchase invoice will be created, and its reference will appear along with the asset reference number in the list view.
Additional features
Use the search bar and filters to locate specific assets.
To update the asset’s depreciation or other details, click the 'Edit' icon and make the necessary changes, then click 'Save' to update.
If needed, you can 'un-explain' an asset by clicking the respective icon.
Alternatively, to explain an asset, click the 'Explain' button and amend any details as required.
Depreciating an asset
When an asset is added, the system automatically calculates the depreciation. These depreciation amounts are displayed for the user’s reference but are not reflected in reports until the user posts them to the journal.
Post depreciation journal
To post depreciation, enter the date till which depreciation needs to be calculated, mark the checkboxes next to the asset reference numbers, then click 'Post journal' to reflect the depreciation in the reports.
In order to view the journals posted, you can either use the hyperlinked reference in this section or view it from the journals section. In order to remove posted depreciation, you can use the rollback icon and select the journals which need to be deleted.
You can also view the purchase invoice connected with an asset by clicking on the reference number displayed just next to fixed asset reference numbers.
Disposal of an asset
To dispose of an asset, navigate to the 'Disposal' tab and click the 'Add' button to begin the process.
Select asset: Choose the asset to dispose of from the dropdown list, which shows all active assets in the system.
Enter disposal details: Provide the necessary information including date of disposal, proceeds received inclusive of VAT. For selecting the payment method, select ‘bank’ if payment is already received from the customer (this generates both sales invoice as well as receipt) and customer (if only sales invoice needs to be generated). Customers could also be created by starting to type and clicking on create. Select the particular bank account in which payment of the asset is received. Once completed, click 'Save' to proceed.
Note The system will automatically fetch accumulated depreciation and written-down value based on the asset's details. It will also calculate the profit or loss from the disposal, which will be reflected in the related reports.
Disposal journal
Upon disposal, the system generates a journal entry that reflects the asset’s disposal, the depreciation adjustments, and the resulting profit or loss. This entry will impact the relevant accounts and appear in the financial reports.
Re-activate a disposed asset
If needed, you can re-activate a disposed asset. Simply click the respective icon, confirm the reactivation, and the asset will reappear in the system. Additionally, you can also utilise the search bar to find specific disposed assets from the list of all items.
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