Assets

A fixed asset is something you own and use over years rather than consume or resell, a vehicle, a machine, a shop fit-out. It is recorded so its value can be carried on the balance sheet and written down gradually over its useful life, instead of hitting the accounts as one lump of expense.

Anatomy of the screen

• Asset tab – code, category, name, description, quantity, photo, and the make, model and serial of the item.
• Value tab – the depreciation method, frequency and rate, and the three ledgers the asset uses: the asset account, the depreciation expense, and accumulated depreciation.
• History tab – the asset's transactions over time.

How it behaves

Acquired from a document

An asset usually begins life as a posted document, a purchase invoice, a bill or a journal, and is created from it. The asset links back to its acquiring document, so the money you spent becomes a tracked asset rather than a one-off cost, and the trail from purchase to asset is intact.

Current value

An asset's current value is not stored as a guess; it is recalculated as depreciation and disposal accumulate: current value equals acquisition cost less accumulated depreciation less any disposed portion. When its quantity reaches zero, the asset moves itself to Disposed. It runs Draft, Review, Active, then Disposed, with Cancel available.

Worked example

You buy a delivery van, recorded on a vendor bill. From that bill you create a fixed asset, set straight-line depreciation over five years, and wire it to the motor-vehicles asset ledger. The van now sits on the balance sheet and will write down a fifth of its cost each year.

Edge cases and good practice

• Create the asset from its document so acquisition is traceable.
• Set the three ledgers on the asset; they decide where its value and depreciation post.
• Quantity reaching zero self-disposes the asset.

Related

• How to: Record a fixed asset
• Reference: Depreciation
• Reference: Disposal