The Fixed Assets Module
The “Fixed Asset module” helps register and keep a comprehensive track of the Fixed Assets, from the Purchase Date to the expiration. The module can calculate the depreciation for the financial year with different metrics such as Straight Line, Declining Balance, and Full Depreciation at purchase.
The Fixed Asset Centre also provides a comprehensive record of all the fixed assets owned by the company such as Asset Name and Type, Vendor Name, Purchase Price & Date, Warranty, etc.. and many more such details. The module helps in tracking the warranty or expiry date of Assets that are covered by the maintenance contract.
Let’s find out the working of this module in Xoro.
Header: Fixed Asset
- Asset Name: Type in the Asset Name.
- Purchase Date: The Date of Purchase of the Asset.
- Purchase Account: The Account linked with the Purchases.
- Purchase Entity: This could be a Customer, a Vendor, or a Store related to the Asset.
- Purchase Cost: The Purchasing Amount of the Asset.
- Asset Type: Fill in the Asset Type. You can Create different Fixed Asset Types by defining the “Asset Account” and the “Depreciation Method” from the Fixed Asset Type Module.
Fixed Asset Type & Centre
- Asset Account: Select a Fixed Asset Account defined in the system.
- Depreciation Method: Depreciation expense is used to allocate the cost of a tangible asset over its useful life. In other words, it is the reduction in the value of an asset that occurs over time due to usage, wear, and tear, or obsolescence.
- No Depreciation: The Asset has no depreciation associated with it.
- Straight-line depreciation is a very common, and the simplest, method of calculating depreciation expense. In straight-line depreciation, the expense amount is the same every year over the useful life of the asset.
- The Declining Balance Method is an accelerated depreciation method in which the depreciation expense declines with the age of the fixed asset.
- Full Depreciation at Purchase: The degree of utilization of assets will not be considered while determining whether the asset is put to use or not. For example, if the asset is used for a trial run then it is considered the asset is put to use.
- Exchange Rate: Applicable if the Purchase Account is not in the Home Currency.
- Notes: Any memo to be added.
- Warranty Expire Date: Select the Expiry Date of the Asset.
- Serial Number: Serial Number of the Asset.
- Store: The Store used to buy the inventory.
- Location: The Location in the Store.
Header: Fixed Asset Depreciation
- Depreciation Type: Rate% or Effective Life (Years)
- Accumulated Depreciation Account: Select an Account
- Depreciation Start Date: Define the date from when the Depreciation of the Asset is applicable.
- Depreciation Expense Account: The Account for deducting the amount if any Expenses are related to the Asset depreciation.
- Averaging Method: The Depreciation to be calculated either Month-wise or by Actual days.
- Salvage Value: Salvage value is the book value of an asset after all depreciation has been fully expensed.
- Cost Limit:
Save & Register the Asset in the system.
Once you save it, it will be recorded as a Draft.
Now you can Register the Fixed Asset in the system, it will be available in the Fixed Asset Centre to view and Edit.
From the “Fixed Asset Configuration” module, set a Depreciation Date from when the depreciation has to be calculated and recorded in the system for Reporting Purposes.
Fill in the Disposal Loss Account, Disposal Gain Account, and Capital Gain Account.
Run the Depreciation to calculate the Depreciation amount of the Fixed Assets stored in the system.
You can go to the “Run Depreciation” module. Select the Date Range (To Date), and hit “Run Depreciaton”.
This will auto calculate the amounts according to the Depreciation Method associated with the Asset.
When you dispose of a fixed asset, you are removing its value from General Ledger. Disposal is a generic term; you may actually sell it, trade it in on a new one, give it away, salvage it for scrap value, or take it to a recycling center.
Disposal of fixed assets is accounted for by removing the cost of the asset and any related accumulated depreciation and accumulated impairment losses from the balance sheet, recording receipt of cash, and recognizing any resulting gain or loss in the income statement.
Dispose Fixed Asset details explained
- Fixed Asset: Select the Fixed Asset to sell (dispose of).
- Disposal Date: The date you sold the Asset.
- Sale Proceeds Account: The account used to reconcile the bank transaction for the sale proceeds.
- Sale Proceeds: The tax exclusive amount you sold the Asset for. Enter 0 if you donated it.
- Exchange Rate: Currency exchange rate, If applicable.
- Depreciation for this financial year: Select the option for this asset.
- Disposal Depreciation Upto Date: Date used to calculate depreciation for this financial year if you select All depreciation up to and including in the Depreciation for this financial year field.
- Disposal Loss Account: If a fixed asset is sold at a price lower than its carrying amount at the date of disposal, a loss is recognized equal to the excess carrying amount over the sale proceeds.
- Disposal Gain Account: When a fixed asset is sold for an amount higher than its carrying amount at the date of disposal, the excess is recognized as gain on disposal.
- Capital Gain Account: Capital gain is an economic concept defined as the profit earned on the sale of an asset that has increased in value over the holding period.