Post depreciation and dispose of an asset

Depreciation spreads an asset's cost over its useful life, one month at a time. Disposal takes the asset off the books when it leaves the company. You run both from the row's actions menu in the asset register, and each one posts a balanced entry to the general ledger.

Before you start

• The asset must be registered and Active. See register and manage fixed assets.

• The fiscal year of the month you post must be open for the asset's branch. See fiscal years.

Post one month of depreciation

1. Open Accounting › Assets › Assets.

2. Open the actions menu on the asset's row and select Depreciate.

3. In Period (month), choose the month to charge. The current month is filled in for you.

4. Select Depreciate.

The system calculates the month's charge from the method you set on the asset:

• Straight line: (cost minus scrap value) divided by the useful life in months.

• Declining balance: the remaining book value multiplied by the yearly rate, divided by 12.

In the month the asset went into service, the charge is in proportion to the days it was in service. The charge never takes the book value below the scrap value.

What the posting does

The entry is dated on the last day of the chosen month. It debits the asset type's depreciation expense account and credits its accumulated depreciation account. The asset's Accumulated depreciation rises and its Book value falls by the same amount, and the month is added to the depreciation schedule on the asset card.

Rules the system applies

• Each month can be depreciated once. Posting the same month again is refused.

• You cannot post a month earlier than the last month already posted for the asset. Post the months in order.

• If nothing is due, for example the asset is fully depreciated or the month is before its in-service date, nothing is posted and the system tells you so.

Dispose of an asset

Use disposal when an asset is sold, scrapped, traded in or given away.

1. Post depreciation up to the month of disposal first, so the book value is current.

2. Open the actions menu on the asset's row and select Dispose.

3. Set the Disposal date and choose the Disposal method: Sale, Scrap, Trade-in or Donation.

4. Enter the Proceeds, the amount you received. Leave 0 when you received nothing.

5. If the proceeds are above 0, choose the Proceeds account the money went to, such as a bank, the cash box or the buyer's account. It is then required.

6. Optional: choose the Gain / loss account. Leave it empty to use the account set on the asset type. If neither is set, the system asks you to choose one.

7. Select Dispose.

What the disposal entry does

The system posts one balanced entry on the disposal date:

• It debits the accumulated depreciation account with the asset's accumulated depreciation.

• It debits the proceeds account with the proceeds, when there are any.

• It credits the asset's account with its cost, which removes it from the books.

• The difference goes to the gain or loss account: a gain when the proceeds are above the book value, a loss when they are below.

The asset's status changes to Disposed. It stays in the register for history, and you can no longer edit, depreciate or dispose of it. The disposal date, method and proceeds appear on the asset card.

Common questions

Is depreciation posted automatically each month? Post it yourself from Depreciate, one asset and one month at a time, so you control what reaches the books.

I posted the wrong month. What now? Posted entries are not deleted. Reverse the amount with a journal entry and ask your accountant how to treat the schedule.

Can I undo a disposal? No. The disposal entry is final. To correct it, post a reversing journal entry and register the asset again if it is still in use.