Fixed assets & depreciation
Things you bought that keep earning for years — vehicles, machinery, computers, fittings. They are not this month's expense, and treating them as one makes a good month look terrible and every month after look better than it was.
The Asset Register holds them and spreads their cost across the years they actually serve.
Registering an asset
Add fixed asset records:
- Name and category
- Registered acquisition value — what you paid
- Acquisition date
- Useful life — how long you expect to use it
- Depreciation method
Categories come ready-made — Office Equipment, Computers & Tech, Furniture & Fixtures, Leasehold Improvements, Intangible Assets — and you can add your own.
Depreciation methods
Straight-line. The same amount every period. A 3,000,000 machine over five years is 50,000 a month. Use this unless you have a reason not to — it is the easiest to explain and the most common.
Declining balance. More in early years, less later. Fits things that lose value fast at the start — vehicles, computers.
Units of production. By use rather than time — hours run, kilometres driven, units produced. Fits machinery whose wear depends on how hard you work it.
Pick a method and stay with it
Changing method mid-life makes year-on-year comparison meaningless and needs disclosure. Decide up front, per category.
What the register shows
- Total asset cost — the registered value of everything you own
- Consumed value to date — accumulated depreciation
- Current carrying amount — what remains on the books
- Monthly expense and active assets run-rate — the ongoing cost
That run-rate is worth internalising: it is real money leaving your profit every month, whether or not you feel it.
Posting depreciation
Post depreciation writes the period's charge to your ledger — an expense, and a reduction in carrying amount. Do it monthly as part of your close, or at least quarterly.
Skipping it overstates profit. Businesses that never post depreciation feel profitable right up to the day a vehicle needs replacing and there is nothing set aside.
Disposal
When an asset is sold or scrapped, record the disposal. The difference between what you get and the carrying amount is a gain or loss — it belongs in your books, not silently in the cash line.
Assets in employees' hands
A laptop is both a fixed asset and something a specific person is carrying around. Record it in both places: here for value and depreciation, and in Benefits & assets for custody.
Related
- Month-end close — where depreciation belongs
- Reports — assets on the balance sheet
- Tax & compliance — capital allowances often differ from book depreciation