Define asset register categories
This topic explains categories for use in the asset register and set defaults for assets contained within it to manage depreciation and nominal codes.
By default we set you up a default category to use with your fixed assets named General Assets.
Adding a new category
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Go to Settings > Asset Register Categories.
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Select Create Category.
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Give your category a Name. This should be quite descriptive, for example Computer Equipment.
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Enter a Description of what will be contained in this category.
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Select the Depreciation method:
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Straight line - this deducts the same amount every year. The two critical factors are the useable life and the salvage value (an estimate of an items value at the end of the depreciation).
Example: An example is a computer costing £1,200 with 3-year useable life.This will depreciate in value by £400/year.
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Reducing balance - this deducts a variable amount of depreciation over the life of the asset. This is usually used for items that have a high usage in the early part of their life. The amount of depreciation then reduces as the life of the asset progresses.
Example: An example is a bit of machinery that has a useful life of 3 years and cost £4000. The salvage value (estimate of worth at the end of its life/depreciation) is £300. The rate of depreciation is 50%.
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Enter in the annual percentage rate that assets within this category should Depreciate by.
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Enter in Depreciate by how often (in months) that this asset should depreciate by the percentage set.
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Select the Balance Sheet Code where the assets depreciated value should be journaled. We recommend you set up another nominal code for depreciation in Settings > Chart of Accounts if you’ve not already done so.
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Select the P&L Code that will be debited when a journal is created for the depreciation. This will appear on your profit and loss report (as a loss). You should set up a code for this in Settings > Chart of Accounts. This should be different from the balance sheet code that you’ve previously set above.
If you’re not sure on any of these settings we advise you speak to your accountant, as the settings here will impact on your financial reports such as balance sheet and profit & loss report.
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Select Create Category.