Fixed Assets & Depreciation
Fixed Assets — Complete User Guide — Two Accounts Web
Comprehensive guide for managing tangible long-term assets, depreciation calculation, disposal, and financial report impact
Table of Contents
- What Are Fixed Assets?
- Prerequisites — Enabling via Customize Menu
- System Hierarchy
- Field-by-Field Guide for Creating a Fixed Asset
- Settings Configuration
- Setting an Opening Balance for a Fixed Asset
- Depreciation Calculation
- Creating a Depreciation Entry
- Asset Disposal
- Reports
- How Balances Are Calculated
- Sample Data and Report Output
- Common Issues and Solutions
- Accounting Regulation Compliance
1. What Are Fixed Assets?
Fixed Assets are tangible long-term assets used in business operations, such as buildings, machinery, vehicles, office equipment, and furniture. The Fixed Assets module tracks:
- Acquisition cost — the purchase price and all costs to bring the asset to its intended use
- Depreciation — the systematic allocation of the asset's cost over its useful life
- Accumulated depreciation — the total depreciation recognized to date
- Book value — acquisition cost minus accumulated depreciation
- Disposal — removal of the asset and recognition of any gain or loss
2. Prerequisites — Enabling via Customize Menu
The Fixed Assets and Depreciation Entries features are not visible by default. You must enable them through the Customize Menu.
How to Enable
- Go to Customize Menu (click the Customize button from navigation bar)
- Find the Fixed Assets toggle and enable it
- The Depreciation Entries toggle will appear once Fixed Assets is enabled
- Enable Depreciation Entries as needed
- Click Save
Enabling the Fixed Assets tab also makes available:
- Settings → Control Accounts → Fixed Assets — create custom BS line items for cost
- Settings → Control Accounts → Fixed Assets Accumulated Depreciation — create custom BS line items for accumulated depreciation
- Reports → Fixed Asset Summary
- Reports → Depreciation Calculation Worksheet
3. System Hierarchy
Level 1 — Balance Sheet Group (Assets)
│
└── Level 2 — Balance Sheet line item (built-in or custom control account)
│ e.g. "Fixed assets, at cost" (cost line)
│ e.g. "Fixed assets, accumulated depreciation" (contra line)
│
├── Level 3 — Individual Fixed Asset
│ e.g. "Office Building", "Machinery Unit 1"
│
├── Level 3 — Depreciation Entry (per period)
│ e.g. "Depreciation for January 2026"
│
└── Level 3 — Disposal
e.g. "Disposal of old machinery"
GL Accounts Used
| Account | Type | Normal Balance | Purpose |
|---|---|---|---|
| Fixed assets, at cost | BS (Asset) | Debit | Records the acquisition cost of all fixed assets |
| Fixed assets, accumulated depreciation | BS (Contra-Asset) | Credit | Records total depreciation recognized to date |
| Fixed assets depreciation | P&L (Expense) | Debit | Records periodic depreciation expense |
| Fixed assets loss on disposal | P&L (Expense/Income) | Debit (loss) / Credit (gain) | Records gain or loss when asset is disposed |
4. Field-by-Field Guide for Creating a Fixed Asset
Navigate to: Fixed Assets tab → click New Fixed Asset button
4.1 Core Fields
| # | Field | Required? | Description | Usage Notes |
|---|---|---|---|---|
| 1 | Name | Yes | The name of the fixed asset (e.g. "Office Desk", "CNC Machine - Model X") | Appears in all lists, reports, and transaction dropdowns. |
| 2 | Code | No | Optional asset ID or tag number (e.g. "FA-001", "MACH-001") | Displayed as "Code - Name" when set. Useful for asset tagging. |
| 3 | Depreciation Rate | Yes | The annual depreciation rate as a percentage | A 20% rate corresponds to a 5-year useful life. For Straight Line, enter 20. For Double Declining Balance, enter 40 (double of SL rate). |
| 4 | Depreciation Method | Yes | The method used to calculate depreciation | Choose from Straight Line, Double Declining Balance, or Sum of Years Digits. |
| 5 | Useful Life Years | Conditional | The expected useful life in years | Required for Straight Line and Sum of Years Digits methods. Used internally for Double Declining calculations. |
| 6 | Salvage Value | No | The estimated residual value at the end of the asset's useful life | The asset is not depreciated below this value. If left at 0, the full cost is depreciated. |
| 7 | Description | No | Additional notes about the asset | Useful for recording purchase details, warranty information, or location. |
| 8 | Division | No | Associates the asset with a department or division | If you use divisional accounting, assign the asset to a division for segmented reporting. |
4.2 Control Account Fields
| # | Field | Required? | Description | Usage Notes |
|---|---|---|---|---|
| 9 | Control Account (Cost) | No | The Balance Sheet line item for this asset's acquisition cost | Select a custom control account (created in Settings) to have this asset's cost appear on a separate BS line. If left blank, it rolls up to the default "Fixed assets, at cost" line. |
| 10 | Control Account (Accumulated Depreciation) | No | The Balance Sheet line item for this asset's accumulated depreciation | Select a custom control account to appear on a separate BS line. Falls back to the default "Fixed assets, accumulated depreciation" line if blank. |
| 11 | Custom Depreciation Expense Account | No | Override the default P&L expense account for depreciation | Check this box and select a Profit and Loss account to use instead of the default depreciation expense account. Useful when different asset categories should be expensed to different accounts. |
| 12 | Custom Expense Account for Disposal | No | Override the default P&L account for gain/loss on disposal | Appears when the asset is marked as disposed. Falls back to the default loss on disposal account if blank. |
4.3 Opening Balance Fields
| # | Field | Required? | Description |
|---|---|---|---|
| 13 | Opening Balance Cost | Conditionally | The acquisition cost of the asset if it was acquired before you started using this system |
| 14 | Opening Balance Date | Conditionally | The date when the opening balance takes effect |
| 15 | Opening Balance Accumulated Depreciation | Conditionally | The total depreciation already recognized on this asset before the system start date |
4.4 Disposal Fields
| # | Field | Required? | Description |
|---|---|---|---|
| 16 | Disposed Fixed Asset | No | Check this box when the asset is sold, scrapped, or otherwise removed from use |
| 17 | Disposal Date | Yes (if disposed) | The date when the asset was disposed |
| 18 | Custom Expense Account for Disposal | No | Override the default P&L gain/loss account for this disposal |
5. Settings Configuration
5.1 Control Account for Fixed Assets (Cost)
Location: Settings → Control Accounts → Fixed Assets
Creates custom Balance Sheet line items for acquisition cost. Each control account appears as a separate line under Assets on the Balance Sheet. If you want "Machinery" and "Office Equipment" as separate lines, create two control accounts.
| Field | Required? | Description |
|---|---|---|
| Name | Yes | The name appearing on the Balance Sheet (e.g. "Machinery", "Vehicles") |
| Code | No | Optional reference code |
| Group | No | The BS group (should be Assets for cost accounts) |
| Position | No | Sort order within the group |
| Inactive | No | Hides from selection lists |
5.2 Control Account for Accumulated Depreciation
Location: Settings → Control Accounts → Fixed Assets Accumulated Depreciation
Same structure as the cost control account, but for accumulated depreciation. These accounts appear as Contra-Asset lines under Assets on the Balance Sheet, reducing the gross asset value.
5.3 Default Balance Sheet Accounts
Location: Settings → Chart of Accounts → find under Assets
Two built-in default accounts are available:
- Fixed assets, at cost — the default line for all acquisition costs
- Fixed assets, accumulated depreciation — the default line for all accumulated depreciation
Both are automatically hidden when no Fixed Asset records exist, and reappear when at least one Fixed Asset is created.
6. Setting an Opening Balance for a Fixed Asset
Fixed Asset opening balances are set directly on the Fixed Asset record, not through the Opening Balance Entry form under Settings. This is because fixed assets have special opening balance handling (cost + accumulated depreciation).
Fields
| Field | What to Enter | Explanation |
|---|---|---|
| Opening Balance Cost | The original purchase cost of the asset | Enter the amount you paid to acquire the asset. This becomes the starting balance for the "Fixed assets, at cost" account. |
| Opening Balance Date | The date the opening balance takes effect | Used as the GL posting date. If a date is not set, the earliest transaction date in the system is used. |
| Opening Balance Accumulated Depreciation | The total depreciation recognized before using this system | If the asset was already partially depreciated when you started using the system, enter the accumulated depreciation amount here. |
What Happens When You Save
The system creates the following General Ledger entries:
Without accumulated depreciation (2 entries):
Dr Fixed Assets, at Cost +OpeningBalanceCost (positive)
Cr Retained Earnings −OpeningBalanceCost (negative = Credit)
Sum: 0 ✅
With accumulated depreciation (4 entries):
Dr Fixed Assets, at Cost +OpeningBalanceCost
Cr Retained Earnings −OpeningBalanceCost
Dr Retained Earnings +OpeningBalanceAccumulatedDepreciation
Cr Accumulated Depreciation −OpeningBalanceAccumulatedDepreciation
Sum: 0 ✅
Example: Opening balance for "Machine" — cost 100,000 with accumulated depreciation 30,000:
Dr Fixed Assets, at Cost 100,000.00
Cr Retained Earnings 100,000.00
Dr Retained Earnings 30,000.00
Cr Accumulated Depreciation 30,000.00
─────────
Dr = Cr = 130,000 ✅
Book value: 100,000 − 30,000 = 70,000 ✅
Control Account Resolution
If the Fixed Asset has custom control accounts set (Control Account for Cost and/or Control Account for Accumulated Depreciation), the opening balance posts to those custom accounts instead of the defaults. If no custom accounts are set, the defaults are used.
7. Depreciation Calculation
7.2 The 360-Day Convention
The system uses a 360-day accounting year with 30-day months for all depreciation calculations. This is a common accounting convention that simplifies partial-period calculations.
Days = (Years × 360) + (Months × 30) + (EndDay − StartDay + 1)7.3 Straight Line Method
The simplest method — equal depreciation each year.
Annual Depreciation = (Cost − Salvage Value) × Rate
Partial Period = Annual × (Days in Period / 360)Example: Cost 100,000, Rate 20%, 365 days:
Full year: 100,000 × 20% = 20,0007.4 Double Declining Balance Method
An accelerated method — higher depreciation in early years.
Rate = 2 / Useful Life Years
Annual = Book Value × Rate
Partial = Annual × (Days / 360)When straight-line depreciation on the remaining book value exceeds the DDB amount, the system automatically switches to straight-line for the remaining life.
Example: Cost 100,000, Useful life 5 years, DDB rate 40%:
Year 1: 100,000 × 40% = 40,000
Year 2: (100,000 − 40,000) × 40% = 24,000
Year 3: (60,000 − 24,000) × 40% = 14,400
... switches to SL when SL depreciation > DDB amount7.5 Sum of Years Digits Method
An accelerated method based on remaining life fraction.
Sum of Years = n × (n + 1) / 2 (where n = useful life)
Annual = (Cost − Salvage Value) × (Remaining Life / Sum of Years)
Partial = Annual × (Days / 360)Example: Cost 100,000, 5-year life:
Sum of Years = 5 × 6 / 2 = 15
Year 1: (100,000 − 0) × 5/15 = 33,333
Year 2: 100,000 × 4/15 = 26,667
Year 3: 100,000 × 3/15 = 20,000
Year 4: 100,000 × 2/15 = 13,333
Year 5: 100,000 × 1/15 = 6,667
Total: 100,000 ✓7.6 Opening Balance Anchoring
When an asset has an Opening Balance Accumulated Depreciation set, the system treats the historical depreciation as a settled fact — it does not recalculate historical amounts. Instead, it calculates depreciation prospectively from the opening balance date forward, using the remaining book value and remaining useful life. This is consistent with IAS 8 Section 14(a) — changes in accounting estimates are applied prospectively.
8. Creating a Depreciation Entry
8.1 Using the Depreciation Calculation Worksheet
The worksheet calculates depreciation for a selected date range using each asset's configured method and rate.
- Go to Reports → Depreciation Calculation Worksheet
- Set the From Date and To Date for the depreciation period
- The worksheet displays each asset with its calculated depreciation amount
- Click the amount to create a Depreciation Entry automatically populated with the calculated values
8.2 Creating a Depreciation Entry Manually
- Go to Depreciation Entries tab → click New Depreciation Entry
- Enter the Date (period-end date)
- Add Lines — select the Fixed Asset and enter the depreciation amount
- Optionally assign a Division per line
- Click Save
8.3 GL Posting Logic
Each depreciation line creates two General Ledger entries:
Dr [Depreciation Expense Account] +Amount
Cr [Accumulated Depreciation Account] −Amount
Sum: 0 ✅
Expense account resolution:
- If the Fixed Asset has a Custom Depreciation Expense Account set, that account is used
- Otherwise, the default depreciation expense P&L account is used
Credit account resolution:
- If the asset has a Control Account for Accumulated Depreciation set, that account is credited
- Otherwise, the default accumulated depreciation BS account is credited
If the asset is disposed: The credit goes to the gain/loss on disposal account instead of accumulated depreciation, with the debit going to the expense account as before.
9. Asset Disposal
9.1 Disposal Workflow
- Open the Fixed Asset record
- Check the Disposed Fixed Asset box
- Enter the Disposal Date
- Optionally set a Custom Expense Account for Disposal (for the gain/loss)
- Click Save
9.2 GL Entries at Disposal
When the system processes disposals, it automatically creates three entries per disposed asset:
1. Cr Fixed Assets, at Cost −AcquisitionCost (removes cost)
2. Cr Accumulated Depreciation −AccumulatedDepr (removes contra)
3. Dr Gain/Loss on Disposal +BookValue (recognizes loss)
Book Value = AcquisitionCost + AccumulatedDepreciation
(AccumulatedDepreciation is negative, so this = Cost − AccumDepr)
DR + CR = −AcquisitionCost + (−AccumulatedDepr) + BookValue
= −(Cost + AccumDepr) + (Cost + AccumDepr) = 0 ✅
Example: Asset cost 100,000, accumulated depreciation 70,000, disposed with zero proceeds:
Cr Fixed Assets, at Cost −100,000
Cr Accumulated Depreciation +70,000 (removes the Cr balance)
Dr Loss on Disposal +30,000 (book value loss)
─────────
DR + CR = 0 ✅
9.3 Gain vs Loss
The gain/loss is computed as:
Gain/Loss = Net Disposal Proceeds − Carrying Amount at Disposal Date
If positive → Gain (Credit to P&L)
If negative → Loss (Debit to P&L)
In the system, the disposal entries assume zero proceeds. If there are proceeds (cash received from sale), that is recorded through a separate Receipt transaction. The gain/loss from the Receipt is captured separately through the P&L gain/loss account.
10. Reports
10.1 Fixed Assets Listing
Location: Fixed Assets tab
| Column | Description |
|---|---|
| Code | The optional asset code or tag number. |
| Name | The asset name. |
| Description | Notes about the asset. |
| Depreciation Rate | The annual depreciation rate percentage. |
| Depreciation Method | SL, DDB, or Sum of Years Digits. |
| Useful Life Years | The estimated useful life. |
| Salvage Value | The estimated residual value. |
| Control Account | The BS line item for this asset's cost. |
| Division | The division assignment. |
| Opening Balance (Net) | Opening cost minus opening accumulated depreciation from the OB fields. |
| Acquisition Cost | Total cost from all GL transactions (including OB entries), clickable for drill-down. |
| Depreciation | Total accumulated depreciation from all GL entries, clickable for drill-down. |
| Book Value | Acquisition Cost minus Depreciation. For disposed assets, this shows 0. |
| Status | Active or Disposed. |
10.2 Fixed Asset Summary Report
Location: Reports → Fixed Asset Summary
This report shows movements in fixed assets over a reporting period:
| Column | Cost Row | Accumulated Depreciation Row |
|---|---|---|
| Opening Balance | Opening cost (from OB entries or prior period) | Opening accumulated depreciation |
| Acquisition Cost | Additions during the period | — (not applicable) |
| Consideration Received | Cost removals (non-disposal credits to cost account) | — (not applicable) |
| Depreciation | — (not applicable) | Depreciation recorded during the period |
| Profit (Loss) | Actual P&L gain/loss from disposal (via the disposal P&L account) | Depreciation from disposal entries (BS contra reversals, not P&L) |
| Closing Balance | Sum of ALL cost transactions | Sum of ALL accumulated depreciation transactions |
10.3 Depreciation Calculation Worksheet Report
Location: Reports → Depreciation Calculation Worksheet
This report calculates depreciation for a specified period using each asset's configured method and rate. It displays:
- Method — the depreciation method used
- Recalculated Depreciation — the calculated amount for the period
- Depreciation Entries — previously posted amounts (clickable to drill down)
- Difference — the variance between calculated and posted amounts
Each asset's calculation uses 360-day years and 30-day months. For assets with opening balances, historical depreciation is anchored and not recalculated (prospective application per IAS 8).
10.4 Balance Sheet
On the Balance Sheet, Fixed Assets appear under Assets with two lines:
Fixed Assets, at Cost XX,XXX.XX (Debit balance)
Fixed Assets, Accumulated Depreciation (X,XXX.XX) (Credit balance — reduces assets)
Net Fixed Assets XX,XXX.XX (automatically computed)
10.5 Profit and Loss Statement
On the P&L Statement, two FA-related items appear under Expenses:
- Depreciation Expense — the period's depreciation charge (operating expense)
- Loss on Disposal — gain or loss from asset disposals (non-operating)
11. How Balances Are Calculated
11.1 Listing Balances
The Fixed Assets listing calculates:
Acquisition Cost = Total of all transactions posted to the
"Fixed Assets, at Cost" account (or the custom control account)
Depreciation = Total of all transactions posted to the
"Fixed Assets, Accumulated Depreciation" account (or the custom control account)
with the sign reversed for display
Book Value = Acquisition Cost − Depreciation
11.2 Opening Balance in the Listing
Opening Cost = Total of opening balance entries posted to the
"Fixed Assets, at Cost" account
Opening Depreciation = Total of opening balance entries posted to the
"Fixed Assets, Accumulated Depreciation" account
with the sign reversed
Opening Balance (Net) = Opening Cost − Opening Depreciation
11.3 Summary Report Calculations
The Fixed Asset Summary report calculates each column as shown below. Since Fixed Assets have no currency setting, the amounts are always in the base currency and are consistent across all entries.
Opening Balance = Entries where the date is before the report period
OR the entry is an opening balance entry
Additions = New purchases within the period (positive amounts)
Disposals = Cost removals within the period, excluding disposal entries (negative amounts)
Termination = Disposal entries that remove the asset cost within the period
Depreciation = Depreciation entries posted within the period
Gain/Loss = Gain or loss from disposal, taken from the disposal account
Closing Cost = Total of all cost account entries
Closing Depr = Total of all accumulated depreciation account entries
11.4 Opening Balance Field vs GL
The OpeningBalanceCost and OpeningBalanceAccumulatedDepreciation fields on the Fixed Asset record are used only at GL construction time to create the initial GL entries. After that, all balances are derived from the GL. Changes to the opening balance fields on an existing asset do NOT retroactively change the GL — you must create a Journal Entry to adjust.
12. Sample Data and Report Output
Setup
| Asset | Code | OB Cost | OB Date | OB Accum Depr | Rate | Method | Life | Salvage |
|---|---|---|---|---|---|---|---|---|
| Office Equipment | FA-001 | 100,000 | 1-Jan-2026 | 0 | 20% | Straight Line | 5 years | 0 |
| Machinery Unit 1 | FA-002 | 500,000 | 1-Jan-2026 | 0 | 20% | Double Declining | 5 years | 0 |
| Delivery Truck | FA-003 | 200,000 | 15-Jan-2026 | 0 | 30% | Straight Line | 3 years | 20,000 |
| Delivery Van B | FA-004 | — (purchased) | — | 0 | 25% | Straight Line | 4 years | 10,000 |
Transactions
| Date | Type | Asset | Amount | Calculation |
|---|---|---|---|---|
| 1-Jan-2026 | Opening Balance | FA-001 | 100,000 Dr | Opening balance cost |
| 1-Jan-2026 | Opening Balance | FA-002 | 500,000 Dr | Opening balance cost |
| 15-Jan-2026 | Opening Balance | FA-003 | 200,000 Dr | Opening balance cost |
| 30-Jun-2026 | Depreciation Entry | FA-001 | 10,000 Dr | 100,000 × 20% × 180/360 = 10,000 ✅ |
| 30-Jun-2026 | Depreciation Entry | FA-002 | 100,000 Dr | 500,000 × 40% × 180/360 = 100,000 ✅ |
| 30-Jun-2026 | Depreciation Entry | FA-003 | 24,900 Dr | (200,000−20,000) × 30% × 166/360 = 24,900 ✅ |
| 31-Dec-2026 | Depreciation Entry | FA-001 | 10,000 Dr | 100,000 × 20% × 180/360 = 10,000 ✅ |
| 31-Dec-2026 | Depreciation Entry | FA-002 | 80,000 Dr | (500,000−100,000) × 40% × 180/360 = 80,000 ✅ |
| 31-Dec-2026 | Depreciation Entry | FA-003 | 27,000 Dr | (200,000−20,000) × 30% × 180/360 = 27,000 ✅ |
| 31-Dec-2026 | Disposal | FA-003 | Sold for 150,000 | Carrying amount = 200,000 − (24,900+27,000) = 148,100 → Gain = 1,900 |
| 1-Mar-2026 | Purchase Invoice | FA-004 | 200,000 Dr | Purchase of Delivery Van B from supplier → Dr FA at Cost, Cr AP |
| 31-Dec-2026 | Depreciation Entry | FA-004 | 39,583 Dr | (200,000−10,000) × 25% × 300/360 = 39,583 ✅ |
| 15-Jun-2027 | Disposal | FA-004 | — | Carrying amount = 200,000 − 39,583 = 160,417 → Sold for 180,000 → Gain = 19,583 |
| 15-Jun-2027 | Receipt | FA-004 | 180,000 Dr | Cash received from sale → Dr Cash, Cr P&L Gain on Disposal |
Verification of Days Calculations
All day counts use the 360-day convention with 30-day months (CalculateDays360):
FA-001 H1 (1-Jan to 30-Jun): (0×360)+(5×30)+(30−1+1) = 0+150+30 = 180 days ✅
FA-001 H2 (1-Jul to 31-Dec): (0×360)+(5×30)+(30−1+1) = 0+150+30 = 180 days ✅
FA-003 H1 (15-Jan to 30-Jun): (0×360)+(5×30)+(30−15+1) = 0+150+16 = 166 days ✅
FA-003 H2 (1-Jul to 31-Dec): (0×360)+(5×30)+(30−1+1) = 0+150+30 = 180 days ✅
FA-004 (1-Mar to 31-Dec): (0×360)+(9×30)+(30−1+1) = 0+270+30 = 300 days ✅Fixed Assets Listing Output
| Code | Name | Acquisition Cost | Depreciation | Book Value | Status |
|---|---|---|---|---|---|
| FA-001 | Office Equipment | 100,000.00 | 20,000.00 | 80,000.00 | Active |
| FA-002 | Machinery Unit 1 | 500,000.00 | 180,000.00 | 320,000.00 | Active |
| FA-003 | Delivery Truck | 200,000.00 | 51,900.00 | 0.00 | Disposed |
| FA-004 | Delivery Van B | 200,000.00 | 39,583.00 | 0.00 | Disposed |
Fixed Asset Summary Report Output
| Opening | Acq Cost | Cons Recvd | Depreciation | Profit/Loss | Closing | |
|---|---|---|---|---|---|---|
| Office Equipment | ||||||
| At Cost | 100,000 | — | — | — | — | 100,000 |
| Accum Depreciation | — | — | — | (20,000) | — | (20,000) |
| Machinery Unit 1 | ||||||
| At Cost | 500,000 | — | — | — | — | 500,000 |
| Accum Depreciation | — | — | — | (180,000) | — | (180,000) |
| Delivery Truck | ||||||
| At Cost | 200,000 | — | — | — | (200,000) | — |
| Accum Depreciation | — | — | — | (51,900) | 51,900 | — |
| Delivery Van B | ||||||
| At Cost | — | 200,000 | — | — | (200,000) | — |
| Accum Depreciation | — | — | — | (39,583) | 39,583 | — |
13. Common Issues and Solutions
13.1 The Fixed Assets Tab Does Not Appear
Cause: The Fixed Assets tab is disabled in Customize Menu (it defaults to OFF).
Solution: Go to Customize Menu and enable the Fixed Assets toggle. Enable Depreciation Entries as needed.
13.2 Depreciation Worksheet Shows Zero
Cause: The selected period may not cover any depreciation dates, or the asset may have no acquisitions within the date range.
Solution: Verify that the From Date is on or before the first acquisition date. Check that the asset has a valid Depreciation Rate and Method set.
13.3 Disposal Not Appearing in Reports
Cause: Disposal entries are generated automatically when financial reports are run. If the asset was disposed but the disposal entries haven't been generated, check that both "Disposed Fixed Asset" is checked AND a "Disposal Date" is set.
13.4 Book Value Not Zero After Disposal
Cause: The listing shows book value as 0 for disposed assets. If it shows a non-zero value, the disposal process may not have run yet. Run a report that triggers the disposal calculation, or check that the disposal date is set correctly.
13.5 Opening Balance Control Account Mismatch
Cause: If a Fixed Asset has a custom Control Account set, the opening balance should automatically resolve to that account. If it does not, the control account may have been set after the opening balance was already posted.
Solution: The control account is resolved at the time the GL is constructed. If you change the control account after the opening balance was saved, you may need to create a Journal Entry to transfer the balance to the correct account.
13.6 Depreciation Calculation Differs From Expectation
Cause: The system uses a 360-day year with 30-day months. Manual calculations using 365-day years will produce slightly different results.
Solution: Use the 360-day convention (12 months × 30 days = 360 days) when verifying depreciation amounts manually.
13.7 Custom Control Account Not Appearing
Cause: Control accounts with "Inactive" checked are hidden from selection lists.
Solution: Go to Settings → Control Accounts and ensure the control account is not marked as Inactive.
14. Accounting Regulation Compliance
14.1 IAS 16 — Property, Plant and Equipment§73
Requirement: Financial statements must disclose for each class of PP&E: (d) additions, (e) disposals, (f) depreciation, (g) impairment losses, and the gain or loss on derecognition.
How this system complies:
- Additions — captured in the Fixed Asset Summary report as "Acquisition Cost"
- Disposals — captured as cost removal in "Consideration Received" and cost removal
- Depreciation — shown in the "Depreciation" column of the Summary report
- Gain/loss on disposal — shown in "Profit (Loss)" column, sourced from the P&L disposal account
- Closing balance — shown for both cost and accumulated depreciation
14.2 IAS 16 §67-68 — Derecognition
Requirement: The gain or loss on derecognition shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset. It shall be recognized in profit or loss.
How this system complies:
Disposal entries created by the system:
Carrying Amount = AcquisitionCost + AccumulatedDepreciation
= Cost − AccumulatedDepreciation
GL Entries:
Cr Fixed Assets, at Cost −AcquisitionCost
Cr Accumulated Depreciation −AccumulatedDepreciation
Dr Loss on Disposal +BookValue (gain/loss in P&L)
DR + CR = 0 ✅
Gain/Loss recognized in P&L ✅
14.3 IAS 8 §14(a) — Changes in Accounting Estimates
Requirement: A change in accounting estimate shall be recognized prospectively from the date of the change.
How this system complies: When a Fixed Asset has an Opening Balance Accumulated Depreciation, the system does not recalculate historical depreciation. Instead, it calculates future depreciation prospectively from the opening balance date, using the remaining book value and remaining useful life.
14.4 IAS 36 — Impairment
Requirement: An asset's carrying amount should not exceed its recoverable amount.
How this system supports compliance: The Fixed Asset listing shows book value prominently. Users can compare book value to recoverable amount and create Journal Entries for impairment losses if needed. The system does not auto-calculate impairment.
14.5 IAS 7 — Cash Flow Statement
Requirement: Cash flows from the purchase and sale of PP&E shall be classified as investing activities.
How this system complies: Both the cost and accumulated depreciation accounts are classified as CashFlowStatementCategory.InvestingActivities. Depreciation is added back as a non-cash adjustment in the indirect method.
14.6 DR = CR Enforcement
Every fixed asset transaction maintains double-entry balance:
Opening Balance (without accumulated depreciation):
Dr Fixed Assets, at Cost +100,000
Cr Retained Earnings −100,000
Sum: 0 ✅
Depreciation Entry:
Dr Depreciation Expense +10,000
Cr Accumulated Depreciation −10,000
Sum: 0 ✅
Disposal:
Cr Fixed Assets, at Cost −200,000
Cr Accumulated Depreciation +54,000
Dr Loss on Disposal +146,000
Sum: 0 ✅
End of Fixed Assets Guide