Managing Fixed Assets

Fixed assets are long-term assets your business owns and uses over multiple years, such as vehicles, equipment, computers, and furniture. This guide explains how to track and depreciate these assets in Prosaic.

Prerequisites: Setting Up Asset Types

IMPORTANT: Before you can add any fixed assets, you must first set up at least one asset type for each category of assets you plan to track.

Asset types are templates that define:

Default depreciation settings (method, useful life, or rate)
Which accounts to use for depreciation journals
Private use account for mixed-use assets

→ Learn how to set up asset types

Once you've created your asset types, return here to start adding individual assets.

What is Depreciation?

Depreciation spreads the cost of an asset over its useful life. Instead of recording the full purchase price as an expense immediately, you claim a portion each month or year. This provides a more accurate picture of your business's financial position.

Example: A $12,000 computer with a 4-year useful life depreciates at $3,000 per year ($250 per month).

Key Concepts

Asset Lifecycle

Assets move through these stages:

Draft - Asset recorded but not yet affecting your accounts. Edit freely.
Active - Asset is being depreciated. Running monthly depreciation updates your accounts.
Disposed - Asset sold or written off.
Deleted - Asset removed from register (reversing any accounting entries).

Depreciation Methods

Straight-Line

Same amount of depreciation each month
Simple and predictable
Example: $10,000 asset over 5 years = $2,000/year = $166.67/month

Diminishing Value

Higher depreciation in early years, lower in later years
Recalculated annually based on remaining value
Common for vehicles and equipment

Important Terms

Purchase Price - What you paid for the asset

Start Date - When depreciation begins (may differ from purchase date)

Cost Limit - Optional cap on depreciable amount. Use when you only want to depreciate part of the purchase price (e.g., motor vehicle depreciation limit)

Residual Value - Estimated value at end of useful life. Depreciation stops here.

Business Use % - For mixed-use assets (partly personal, partly business). Only the business portion is depreciated.

Understanding Asset Fields

When creating an asset, you'll need to provide:

Basic Information

Name - Description of the asset (e.g., "Toyota Hilux", "MacBook Pro")
Asset Type - Category with default depreciation settings (e.g., "Motor Vehicles", "Computer Equipment")
Asset Number (Optional) - Optional internal reference number

Dates

Purchase Date - When you bought the asset
Start Date - When to start depreciating

Amounts

Purchase Price - Full amount paid
Cost Limit - Optional (leave blank unless you want to limit depreciable amount)
Residual Value - Expected value when fully depreciated (often $0)

Depreciation Settings

Choose ONE of these:

Useful Life (Years) - How many years the asset will be used
Depreciation Rate (%) - Annual depreciation rate (e.g., 20% = 5-year life)

Note: You cannot set both useful life and rate.

Mixed-Use Assets

Business Use % - Set to less than 100% for assets used partly for personal purposes

Example: If a vehicle is 70% business use, only 70% of its cost is depreciated as a business expense.

Imported Assets

If you're adding assets from another system:

Initial Accumulated Depreciation - Enter depreciation already recorded in your previous system
The system will continue depreciation from the remaining book value

How to Create a Fixed Asset

Automatic Draft Creation from Bank Transactions

> 💡 Quick Tip: The easiest way to create an asset is to reconcile the purchase transaction to a fixed asset account. The system automatically creates a draft asset with all purchase details pre-filled!

How it works:

When you reconcile a bank transaction to a fixed asset account (e.g., "Computer Equipment", "Motor Vehicles")
System automatically creates a draft asset with:

Name (from transaction description/merchant)
Purchase date (from transaction date)
Purchase price (from transaction amount)
Asset type (if one exists for that account)

You just need to:

Complete depreciation settings (useful life or rate)
Review and activate

Benefits: Saves time and ensures purchase details match your bank records exactly.

Manual Draft Creation

To create an asset manually:

Go to Fixed Assets > Assets
Click Create fixed asset in the top right corner
Fill in asset details:

Name and asset number
Purchase date and start date
Purchase price
Select asset type (provides defaults)

Review depreciation settings (can override defaults)
Save as Draft

💡 Tip: Draft assets don't affect your accounts, so take your time to ensure details are correct.

Activate Asset

Once you've reviewed the draft:

Open the draft asset
Click Activate
Optionally create a purchase journal:

If you paid from a business account, select the source account
System creates journal entry: DR Asset Account, CR Bank/Source Account
If payment was already recorded elsewhere, leave blank

The asset is now Active and ready for depreciation.

Running Depreciation

Depreciation calculates monthly expenses for your assets.

Important: Current Financial Year Only

The system only processes depreciation for the current financial year (April 1 - March 31). It will not create journals for previous years.

Example: In January 2026 (FY 2025-26), if your asset started in May 2024:

System will process: April 2025 - January 2026
System will NOT process: May 2024 - March 2025 (previous FY)
You'll need to manually adjust opening balances if needed

How to Run Depreciation

Go to Fixed Assets Register
Click Run Depreciation
Select:

Target month (last month to depreciate up to)
Which assets (all, specific entity, or individual assets)

Review summary
Click Run

The system will:

Calculate monthly depreciation for each asset
Create journal entries (DR Depreciation Expense, CR Accumulated Depreciation)
Update asset book values
Process only months that don't already have depreciation

💡 Tip: Run depreciation monthly or at your reporting period end (monthly, quarterly, annually).

What if I Make a Mistake?

The ability to rollback depreciation has not been implemented yet. You will need to delete the asset and start over.

Disposing of Assets

When you sell or write off an asset:

Open the active asset
Click Dispose
Enter:

Disposal date
Disposal proceeds (sale amount)
Journal details

System calculates gain or loss automatically
Creates disposal journal

The asset status changes to Disposed and can no longer be edited.

Deleting Assets

Draft Assets

Can be deleted anytime
No accounting impact to reverse

Active Assets

Can be deleted in two scenarios:

No depreciation has been run: Safe to delete, reverses the purchase journal (if created)
Asset start date is in current financial year: Journals will be voided, including any depreciation journals and the purchase journal. If the asset was created from a transaction, the transaction will be unaffected.

Disposed Assets

Cannot be deleted

Common Scenarios

Scenario 1: New Computer Purchase (from Bank Transaction)

Most Common Path: Purchasing via bank payment

Purchase MacBook Pro for $3,000 on July 1, 2025 (paid from business bank account)
Reconcile the bank transaction to "Computer Equipment" (fixed asset account)

System automatically creates a draft asset with:
- Name: MacBook Pro (from transaction description)
- Purchase Date: July 1, 2025
- Purchase Price: $3,000
- Asset Type: Computer Equipment (matched from account)

Complete the draft:

Review/adjust useful life (defaults from asset type)
Set residual value if needed (default $0)

Activate asset (no purchase journal needed - transaction is the purchase)
Run depreciation to end of financial year (March 2026)

System depreciates: July 2025 - March 2026 (9 months)
Monthly depreciation: $3,000 / 36 months = $83.33
Total for FY: $83.33 × 9 = $750

Scenario 2: Vehicle with Mixed Use

Purchase Toyota Hilux for $50,000
Use 70% for business, 30% personal
Create asset:

Select Asset Type: Motor Vehicles
Business Use %: 70%
Depreciation on $35,000 (70% of $50,000)

Purchase journal splits:

DR Asset Account: $35,000 (business)
DR Private Use Account: $15,000 (personal)
CR Bank: $50,000

Note: Your Motor Vehicles asset type must have a private use account set up for this to work.

Scenario 3: Importing Existing Asset

You're moving from another system with a 2-year-old laptop:

Original purchase: $2,000 (January 2023)
Accumulated depreciation in old system: $1,000
Create draft:

Purchase Price: $2,000
Start Date: January 1, 2023
Asset Type: Computer Equipment
Initial Accumulated Depreciation: $1,000

Activate (no purchase journal - already recorded)
Important: Manually adjust account balances:

Asset Account: +$2,000
Accumulated Depreciation: +$1,000
Net effect: +$1,000 book value

System continues depreciation from $1,000 book value

Financial Year Restrictions

Remember: The system only creates depreciation journals for the current financial year (April 1 - March 31).

If you're adding historical assets:

Set appropriate start dates
Enter initial accumulated depreciation
Manually adjust opening account balances
System will depreciate from current financial year forward