# Fixed assets

> Register tangible and intangible assets, categorize them by type, run depreciation or amortization on a schedule, edit them safely, and dispose of them with the correct gain or loss.

Source: https://www.accountfun.com/docs/guides/fixed-assets/

The **Fixed Assets** register (menu: **Accounting → Fixed Assets**) tracks your long-lived assets — equipment, vehicles, furniture, software, trademarks, goodwill — and posts depreciation automatically. It handles the full lifecycle: register, depreciate each period, edit safely, and dispose with a correct gain or loss.

## Two categories

There are two **categories**, treated identically except for terminology and the accounts used:

* **Tangible** — physical assets like equipment and vehicles (**depreciation**).
* **Intangible** — non-physical assets like software licences, trademarks, and goodwill (**amortization**). Restricted to **straight-line** (or *no amortization*) per IAS 38, because amortization must be systematic.

An intangible with an **indefinite useful life** (e.g. goodwill that isn’t being amortized) uses **No depreciation** — it stays at cost on the balance sheet and is reviewed for impairment instead.

## How depreciation works (the short theory)

Depreciation spreads an asset’s cost over the periods that benefit from it — the **matching principle**. Rather than expensing a $12,000 machine all in the month you buy it, you charge a little to the P\&L each month as the asset is used up.

Three numbers drive everything:

* **Depreciable base** — the amount you’ll eventually write off. It’s `cost − salvage`, or `cost limit − salvage` when you set a cost limit (see below).
* **Accumulated depreciation** — the running total of all depreciation charged so far (held in a contra-asset account that reduces the asset on the balance sheet).
* **Net book value (NBV)** — `cost − accumulated depreciation`. This is the asset’s current carrying amount; it falls each period toward the salvage floor.

The final period is always **clamped** so accumulated depreciation lands exactly on the depreciable base — no rounding residue, no over-depreciation.

## Asset types

An **asset type** is a label you use to categorize assets — *Computer Equipment*, *Motor Vehicles*, *Trademarks*, *Office Furniture*. Types are optional but make the register easy to scan and group.

You don’t have to set types up in advance. On the register or edit form, the **Asset type** field is a search box: start typing to filter existing types, or type a brand-new name and choose **Create as a new asset type**. The new type is added on the fly with neutral defaults (straight-line, full-month) and selected immediately — no trip to settings required.

Types can carry defaults

Each type can optionally store a **default depreciation method, rate, useful life, and set of posting accounts**. When you pick such a type while registering an asset, those values pre-fill the form — so every “Laptop” can depreciate the same way with one click. The defaults are optional; a type can be a pure category with nothing filled in.

Manage types under **Fixed Assets → Settings → Manage Asset Types**. The list shows each type’s category, method, a live count of **how many assets use it**, and an active/inactive status, plus summary stats at the top (totals, tangible vs. intangible, categorized assets). You can add, edit, activate/deactivate, or delete a type — deletion is blocked while assets still reference it (remove the category from those assets first).

## Register an asset

**Fixed Assets → Register Asset.** The form has several sections:

| Section                 | Fields                                                                                                                                                                   |
| ----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| **Asset Details**       | **Asset type** (search or create — see above), Name, Reference/code, Category, Description                                                                               |
| **Cost & Depreciation** | **Purchase date**, **Purchase price** + **Currency**, Salvage value, Cost limit, Depreciation start date, Useful life (yrs), Rate, Depreciation method, Averaging method |
| **Posting Accounts**    | Asset (cost) account, Accumulated depreciation/amortization account, Depreciation/amortization expense account — all must be **distinct**                                |
| **Capitalization**      | **Post the acquisition cost to the ledger** (off by default) + the **Funded by** credit account                                                                          |

A few fields worth explaining:

* **Currency** — the purchase price can be in any enabled currency. If it differs from your org’s base currency, you’ll be prompted to confirm the **exchange rate**; depreciation is then posted in the asset’s own currency.
* **Cost limit** — a ceiling on the depreciable amount, for when only part of the cost is eligible to depreciate (e.g. a tax capitalization threshold). Leave it blank to depreciate the full purchase price. It can’t exceed the purchase price, and the un-depreciated residual (`purchase price − cost limit`) stays on the books at the end.
* **Depreciation start date** — when the asset enters service. Leave it blank to use the purchase date (the usual case). It can’t be before the purchase date.
* **Averaging** — **Full month** gives a whole month’s charge regardless of the day you acquired it; **Actual days** prorates the first month by the eligible days.

### Capitalization

When **Post the acquisition cost to the ledger** is on, registering also posts **Dr Asset (cost) / Cr Funding account** immediately — the asset lands on your balance sheet the moment you create it. The **Funded by** account is the cash, payable, loan, or equity account that paid for it.

Capitalization is **off by default**. Turn it on when you’re paying for the asset directly from a bank or loan account. Leave it off if you capitalize through a [bill](https://www.accountfun.com/docs/guides/bills/) or spend-money instead — the asset will be recorded on the register, but you’ll post the cost entry yourself.

Capitalization is recommended

Turning capitalization on at registration is what makes the **disposal** flow balance cleanly later (there’s a cost entry to remove). You can still dispose without it, but you’ll record the disposal as a [manual journal](https://www.accountfun.com/docs/guides/manual-journals/).

The asset starts in **Registered** status. A **fully depreciated** asset flips to that status automatically once depreciation reaches the salvage floor; a disposed asset moves to **Disposed**.

## Edit an asset

Open any asset and click **Edit** to change its details. What you can edit depends on whether depreciation has run yet:

* **Before depreciation** — everything is editable: cost, method, rate, useful life, accounts, dates, currency. Use this to correct a misregistered asset before you post anything.
* **After depreciation has run** — cost, method, accounts, and dates are **locked**, because journals have already been posted against them. You can still edit the **name, reference/code, description**, and **re-categorize the asset type** (the type is just a label, so it’s always safe to change). To unlock the rest, reverse the posted depreciation through the disposal flow.

This lets you fix typos and re-categorize freely without risking an inconsistency between the register and the ledger.

## Depreciation methods

| Method                       | How it works                                                                      |
| ---------------------------- | --------------------------------------------------------------------------------- |
| **No depreciation**          | Book value stays at cost (use for indefinite-life intangibles or land)            |
| **Straight line**            | `(depreciable base) / useful life / 12` per month. Requires a useful life.        |
| **Declining balance**        | Charges against current net book value. Requires an explicit **rate** (e.g. 25%). |
| **Declining balance (150%)** | Rate = 1.5 / useful life, with optimal switch to straight-line                    |
| **Declining balance (200%)** | Rate = 2.0 / useful life (double-declining), with optimal switch to straight-line |
| **Full at purchase**         | Entire depreciable base charged in the acquisition month                          |

For the declining-balance methods with a useful life, AccountFUN applies the standard **optimal switch to straight-line**: each period it takes the larger of the declining-balance charge and the straight-line charge over the remaining life, so the asset fully depreciates by the end of its stated life rather than asymptotically approaching salvage. Salvage is always a floor — book value never drops below it.

## Run depreciation

Click **Run Depreciation** (optionally scoped to the current category tab) and pick an **as-of date**. AccountFUN posts the depreciation journal (**Dr Depreciation Expense / Cr Accumulated Depreciation**) for every eligible asset, **catching up all missing months up to that date**.

A few important behaviors:

* **Pre-flight validation.** If *any* eligible asset has a bad config (incompatible accounts, missing useful life), AccountFUN posts **nothing** and reports every problem — so a misconfigured asset can’t quietly corrupt the run.
* **Requires a depreciation start month** (set under **Fixed Assets → Settings → Depreciation Start Month**). This is an org-wide floor: charges only begin from the first day of that month, even for assets bought earlier. Each asset’s own *depreciation start date* (or purchase date) determines its month-by-month eligibility on top of that.
* **Idempotent.** Re-running the same as-of date posts nothing new — each period is recorded once with a unique `(asset, period)` key.
* **Per-asset atomicity.** Each asset depreciates in its own transaction, so one locked-period failure won’t roll back the assets already posted.
* **Locked periods are respected.** A period on or before the org lock date is skipped with a clean error.

Each posted period writes an immutable **schedule** row (period, charge, accumulated, book value, journal link) shown on the asset’s detail page.

Depreciation journals can’t be voided directly

Once depreciation has run, the asset’s depreciation-affecting fields are **locked**. To undo depreciation, reverse it through the **disposal** flow, not by editing the asset or voiding the journal — see [Manual journals](https://www.accountfun.com/docs/guides/manual-journals/) for why these journals are protected.

## Dispose of an asset

When you sell, scrap, or retire an asset, click **Dispose** (available on Registered or Fully Depreciated assets). Enter:

* **Disposal date**
* **Proceeds received** (default 0 for scrap/donation)
* **Proceeds account** (the cash/receivable account that received the money)
* **Gain on disposal account** (income) and **Loss on disposal account** (expense)

AccountFUN posts the textbook derecognition entry — removes the accumulated depreciation and the asset at cost, records the proceeds, and books any **gain** (proceeds > net book value) or **loss** (proceeds < net book value) to the accounts you chose. The asset moves to **Disposed** with book value zero.

Best with capitalization on

Disposal works most cleanly for assets **capitalized through the register** (so there’s a cost entry to remove). If you skipped capitalization, record the disposal as a [manual journal](https://www.accountfun.com/docs/guides/manual-journals/) instead.

## Worked example: a laptop over 3 years (tangible)

You buy a laptop for $1,800 and depreciate it straight-line over 3 years, $0 salvage.

1. **Register Asset**: type *Computer Equipment* (template: straight-line, 3 yrs, accounts 720/711/416). Purchase price $1,800. Turn **capitalization** on, funded by **Business Checking**. → Posts **Dr Computer Equipment $1,800 / Cr Bank $1,800**. Book value $1,800.
2. Each month, **Run Depreciation** posts **Dr Depreciation $50 / Cr Accumulated Depreciation $50** (`1800 / 36`). After 24 months: accumulated depreciation $1,200, book value $600.
3. At month 30 you sell the laptop for $300. **Dispose**: proceeds $300, proceeds account *Bank*, gain/loss accounts as configured. Net book value at disposal = $300 (cost $1,800 − accumulated $1,500). Proceeds ($300) = book value ($300), so **no gain or loss**. Asset → **Disposed**.

Had you sold it for $450 instead, AccountFUN would book a **$150 gain** to your gain-on-disposal income account. Sell for $150, and it books a **$150 loss**.

## Worked example: trademark registration costs (intangible / amortization)

You spend $24,000 on legal and filing fees to register a trademark. It has a **finite useful life of 10 years**. Because it’s intangible, it’s *amortized* (the intangible equivalent of depreciation) on a straight-line basis.

1. **Register Asset**: category **Intangible**, type *Trademarks* (template: straight-line, 10 yrs, accounts 740 *Trademarks* / 741 *Accumulated Amortization* / 417 *Amortization Expense*). Purchase price $24,000, salvage $0. Turn **capitalization** on, funded by **Bank**. → Posts **Dr Trademarks $24,000 / Cr Bank $24,000**. Book value $24,000.
2. Each month, **Run Depreciation** posts **Dr Amortization Expense $200 / Cr Accumulated Amortization $200** (`24000 / 120`). After 12 months: accumulated amortization $2,400, book value $21,600. After 10 years the trademark is fully amortized and flips to **Fully Depreciated**.

A few intangible-specific notes:

* **Salvage is usually $0** for intangibles, unless a third party has committed to buy it at the end of its life (rare).
* **Indefinite-life intangibles** (e.g. goodwill you’ve elected not to amortize) use **No depreciation** — they stay at cost and are impairment-tested instead.
* The accounts mirror the tangible setup: an **Intangible Asset** (cost) account, an **accumulated amortization** contra-asset, and an **amortization expense** account. AccountFUN defaults the contra-asset to the system accumulated-amortization account when you leave it blank.