Fixed asset

Why Does My System Not Having Asset Management?

Ans: The Asset Management is a standard feature available in our Pro and Pro-X packages. If you are using a Plus or other version, you need to upgrade to Pro or Pro-X to have the function. You can purchase this add-on feature if you are using "Plus". Please contact our sales representative.

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How Many Depreciation Methods Are Available In the Asset Management?

Ans: There are 2 types of depreciation methods, namely Straight Line and Reducing Balance. These are the 2 most commonly used depreciation methods.

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What Are the Differences Between the "Straight Line" and "Reducing Balance" Depreciation Methods?

Ans: They are based on the following formula:

Straight Line Depreciation Method:

Monthly Depreciation: (Acquired Value - Permanent Remaining Book Value) / the number of months.
- Example:
- Asset: Computer
- Acquired Value: $1,750
- Permanent Book Value: $20 (This is the value to be remained in the book after the usable period is over.)
- Usable Period: 36 months
- Monthly Depreciation: ($1,750 - $20) / 36 = $48.06/month.

Reducing Depreciation Method:

Monthly Depreciation: [(Acquired Value - Permanent Remaining Book Value) - (Accumulated Depreciation)] / 12 * (The % of Depreciation)
- Asset: Computer Server
- Acquired Value: $150,000.00
- Permanent Book Value: $10,000.00 (This is the value to be remained in the book after the usable period is over.)
- Usable Period: 36 months
- Depreciation Rate: 80%
- Starting Month of Depreciation: March (March - December ==> 10 months)

Year 1 (Monthly Depreciation): (150,000 - 10,000)/12 * 80% = $9333.33
Year 2 (Monthly Depreciation): [(150,000 - 10,000)- (9333.33 * 10)] * 80% /12 = $3111.11
Year 3 (Monthly Depreciation): [(150,000 - 10,000)- (9333.33 * 10) + ($3111.11 * 12)] * 80% /12 = $622.22

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Can I Add Other Depreciation Method?

Ans: Yes, we can develop other methods for our customers upon request. Please contact our Sales Representative.

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How To Setup Fixed Asset Management And To Start Tracking My Asset?

Ans: There are few simple steps to follow.

Setup Asset Accounts in Chart of Account (COA)
1. In the example, we have setup a "Fixed Asset" sub-group under the COA Class "Asset" (Fig 1).
2. Renovation, Furniture and Fixture, Office Equipment, Motor Vehicle, and IT Equipment and Software. These accounts are grouped under "Fixed Asset Group" in the COA. (Fig 2)
3. Under the Expense Class, setup a "Depreciation of Fixed Asset" sub-group. Then, setup the respective COA for recording the Depreciation of the Fixed Asset as shown below (Fig 3).
4. Add Account Codes to record Depreciation (Expenses), Accumulated Depreciation (Asset in Balance Sheet) and Sales of Asset (under Other Income which is under income class).
Create Items for Fixed Asset
1. Enter the Fixed Asset details. (Fig 4)
2. On the right side of the form, check "Use As Asset" as shown. (Fig 5)
Update
1. Under the Asset Management Sub-tab, there are 5 functions namely: Asset Setup, Asset Deprecation Months, Asset Category, Assets Master and Depreciation Posting.
  1. Asset Setup:
    1. Income account for Fixed Asset Sale: Use the pull down menu to select the account code for sales of asset. The sale of asset should be an account created under "other income".
    2. Loss account for Fixed Asset Sale: Same account code as 'Income Account for Fixed Asset Sale' can be used. Together, it can record if it is a gain or a loss when an asset is sold.
    3. Acquired Initial days not to depreciate same month: This is the number of days in a month needs to be met when the asset is acquired before the system will start to compute the depreciation. For example, if the value of 10 is entered, and purchase date of asset is 15-Sep-17, then depreciation will be charged in next month i.e. October. If the asset is acquired within the first 10 days of the month, the depreciation will be charged in current month i.e Sep 2017.
    4. Acquired Final day not to depreciate same month: Similar to the above, if the value of 10 is entered, and the purchase date of asset is on 15 Sep 2017, the depreciation will be charged this month, Sep'2017. If the asset is acquired within the last 10 days of the month, then it will be charged the next month, that is Oct'2017.
  2. Asset Deprecation Months: This is to generate the months schedule for a Fiscal year. If it has not been generated, a "Add New" button will appear. Just click on the button.
    1. Fiscal Years: This is the Fiscal year that user wants to generate the monthly depreciation schedule. Use the pull down menu to select the Fiscal year. If a Fiscal does not appear on the pull down, the Fiscal Year can be created under System Setup. Once the "Add New" button is click and the months are created, there is nothing else need to be done here.
  3. Asset Category: This is to create the Asset Category. For example, motor vehicle.
    1. Asset Category: This is the name of the asset category to be created. For example, Vehicle.
    2. Depreciation Method: Use the pull-down menu to select either the "Straight Line" or "Reducing Balance Method".
    3. Asset Life: Enter the usable period of the asset in months.
    4. Asset Account: This is the Account under Asset. For example, 1850: "Motor Vehicle at Cost" where 1850 is the Motor Vehicle Asset account number.
    5. Depreciation Account: This is the Account under Expense. For example, 7050: "Depreciation - Motor Vehicle" where 7050 is the Depreciation - Motor Vehicle account number.
    6. Accumulated Depreciation: This is an Asset item in Balance Sheet. For example, 1855: "Motor Vehicle Accumulate Depreciation". This is to record the Accumulated Depreciation of the Asset. When the asset is sold, this account will be reset.
  4. Asset Master: Enter the Asset details here. After the asset details are entered correctly, the records will be captured and the computation of depreciation will be handled by the system. The list of assets will be listed here. User can click on the "Depreciation Schedule" to see the schedule of the depreciation each month. If the asset is to be sold, just click on the corresponding "Sale" link. For Asset sale, just enter the date and the amount of sale value.
    1. Asset Category:Use the pull down menu to select the asset category. The asset category must be entered prior to this step.
    2. Asset Name: Give a name to the asset. For example, "Acer PC Aspire 1234".
    3. Barcode/Identificator: Enter the bar code number, serial number or asset number here.
    4. Location: Enter the location of the asset. For example, General Manager's Room.
    5. User Name: Enter the user name. For example, "John Lee". This will help to track or trace who is holding on to the asset.
    6. Item Code: This is linked to the Item Master. Use the pull down menu to select the asset item.
    7. Acquisition Date: Enter the date of the asset is purchased or received depending on the company policy.
    8. Acquisition/Purchase Value: Enter the purchase value of the asset. This will be used to compute the monthly depreciation.
    9. Permanent Remaining Book Value: Some companies may want to keep a permanent value of an asset when it has reached its usable life span. For example, when a machine is purchased at $100K, the company may want to keep $1,000 for this machine in the account book permanently. Then, enter 1000 in this field.
    10. Depreciation Method: There are 2 depreciation methods: Straight Line and Reducing Balance. The computation formulas are shown in the sections above.
    11. Asset Life: Enter the number of months desired for the asset usable time span in months.
    12. Asset Account, Depreciation Account, Accumulated Depreciation Account: These are the respective Chart of Account. These accounts must be created under Chart of Account as explained above:
      1. Asset Account is an account under Asset,
      2. Depreciation Account is an account under Expense and
      3. Accumulated Depreciation Account is and account under Asset.
  5. Depreciation Posting: This is where it saves the time of the person who is managing the asset and the asset depreciation. The steps to post the depreciation is very simple.
    1. Select the Asset Category or leave it as "All" from the pull down menu. If All is selected, all the asset categories will be searched.
    2. Select the Fiscal Year from the pull down menu and select the month from the pull down menu. Click "Search".
    3. All the assets match the search criteria will be displayed. If the assets have been posted, it will be indicated on the extreme right column as "Yes". You cannot post an asset that is already posted.
    4. User can all click on the "Post Depreciation" button and the system will post those items that have not been posted.