New Features Guide
Fixed Assets
Before beginning to record your fixed asset in the register, you should have all your asset details to hand and think about the depreciation method you want to select for each asset.
Depreciation methods
Straight Line
The asset's value is reduced by a percentage value that is based on the
Initial Value
, the
Residual
Value
and the
Asset Life
span in years or periods until the
Net Book Value
is reduced to the
Residual Value
(which may or may not be zero). The value of depreciation remains the same each time.
This is appropriate if you forecast that use of the asset is spread evenly across the time period, for example, the use of a temporary prefabricated building.
What is the calculation?
Annual Straight Line
Period Straight Line
Initial Value - Residual Value / Asset Life in years
Initial Value - Residual Value / Asset Life in periods
If the calculation pushes the
Net Book Value
to a value that is less than the
Residual Value
, the depreciation amount posted is the
Net Book Value
-
Residual Value
.
For example
If you enter an asset with an
Initial Value
of £12000, a
Residual Value
of £3000, and you want this to be depreciated over a three year period:
Year Depreciation Calculation Depreciation
Amount
Net
Book
Value
1
2
3
Initial
Value
12000
12000
12000
-
-
-
Residual
Value
3000
3000
3000
/
/
/
Asset
Life
in years
3
3
3
£3000
£3000
£3000
£9000
£6000
£3000
If this was by period, the initial value would be divided by the number of periods in the three years, for example 36 if you were using 12 periods per year, in order to give a periodic depreciation amount. In this example that would be £250. Each period that passed the net book value would reduce by that amount.
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8 | Your wishes - features and enhancements
Straight Line
depreciation is applicable if the value of the asset is to be reduced evenly over time (e.g. furniture).
Reducing Balance
The asset's value is reduced by a percentage of the
Net Book Value
(which reflects the asset's current worth) every year or period until it is reduced to a realistic scrap or write off value (which may or may not be zero). The value of the depreciation reduces every time. This is appropriate if you expect the asset to wear out quickly.
Reducing Balance
depreciation is applicable if the value of the asset needs to be reduced quickly at first and then more slowly later (e.g. vehicles).
What is the calculation
Annual Reducing Balance
Period Reducing Balance
Net Book Value
*
Annual Depreciation %
Net Book Value
*
Period Depreciation %
If the calculation pushes the
Net Book Value
to a value that is less than 0 (zero), the depreciation amount posted is the difference between the
Net Book Value
and 0 (zero).
For example
If you enter an asset with an
Initial Value
of £12000, the initial Net Book Price is £12000 and you want to depreciate this over four years, this would be a depreciation of 25% each year.
Year Depreciation Calculation Depreciation
Amount
Net Book
Value
1
2
3
4
Net Book
Value
12000.00
9000.00
6750.00
5062.50
*
*
*
*
Depreciation Percent
25
25
25
25
/
/
/
/
100
100
100
100
£3000.00
£2250.00
£1687.50
£1265.63
£9000.00
£6750.00
£5062.50
£3796.87
Depreciation of an asset using the
Reducing Balance
method is higher initially than the
Straight Line
method and it then reduces over the asset life. Theoretically, using the
Reducing Balance
method, the book value will never reach zero but for all practical purposes, the write off value of an asset is reached by using a realistic percentage.
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New Features Guide
Using the Fixed Assets register
You can add and maintain fixed assets, depreciate, dispose of and delete assets.
You can create fixed asset records by adding some information initially and filling in the details later.Fixed assets only become active once you have entered all depreciation details for an asset.
Once it is active, you can depreciate or dispose of it.
You can view details of your fixed assets such as asset net book value, last depreciated date, total depreciation posted and so on, using the Fixed Asset Enquiry workspace and produce reports which list your fixed assets in summary and in detail. All of these processes are described in full in the
Sage 200 help for the The Fixed Assets feature .
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