Setting Up Asset Types

Asset types are templates that define how different categories of fixed assets should be depreciated and which accounts to use for depreciation journals. You must create asset types before you can add any fixed assets to your register.

What are Asset Types?

Think of asset types as categories or templates for your fixed assets. Each asset type defines:

• Default depreciation settings - Method (straight-line or diminishing value), useful life, or depreciation rate
• Account mappings - Which accounts to post to when recording depreciation
• Mixed-use support - Optional account for personal use portion

Examples of asset types:

• Motor Vehicles
• Computer Equipment
• Office Furniture
• Machinery & Equipment
• Buildings

Key Restrictions

One Asset Type Per Asset Account

Each asset type must use a unique asset account. You cannot have two asset types using the same asset account.

💡 Want more refined categories? See Creating Child Accounts for Detailed Categorization below.

Asset Types Lock After First Use

Once you've created assets using an asset type, you cannot edit or delete that asset type. This prevents inconsistencies in existing depreciation records.

If you need to change settings:

1. Create a new asset type with the correct settings
2. For individual assets, you can override depreciation settings without changing the asset type

Creating Child Accounts for Detailed Categorization

If you need more refined asset categories, you can create child accounts under a main account and then create an asset type for each child.

Example: Breaking down Vehicles

Instead of one "Motor Vehicles" asset type, you could create:

Account 161 "Motor Vehicles" (parent account) ├─ Account 161.1 "Utes" ├─ Account 161.2 "Vans" └─ Account 161.3 "Trucks"   

Then create separate asset types:

• Utes Asset Type → Asset Account: 161.1 "Utes"
• Vans Asset Type → Asset Account: 161.2 "Vans"
• Trucks Asset Type → Asset Account: 161.3 "Trucks"

Benefits:

• More granular reporting by vehicle type
• Different depreciation rates if needed (e.g., heavy trucks vs. light vehicles)
• Clearer categorization in your balance sheet
• Better tracking of specific asset categories

Required Information

When creating an asset type, you'll need:

1. Basic Details

Name (required)

• Must be unique within your entity
• Examples: "Motor Vehicles", "Computer Equipment", "Office Furniture"

2. Depreciation Defaults

Depreciation Method (required)

• Straight-Line: Same depreciation amount each month
• Diminishing Value: Higher depreciation in early years

Useful Life OR Depreciation Rate (one required)

• Useful Life (Years): How many years assets typically last (e.g., 5 years)
• Depreciation Rate (%): Annual depreciation percentage (e.g., 20% = 5-year life)
• You must provide one, but not both

3. Account Mappings (all required)

Asset Account

• Where the asset's purchase value is recorded
• Must be a fixed asset account (typically 150-199 range)
• Must be unique per asset type
• Example: 161 "Motor Vehicles"

Accumulated Depreciation Account

• Contra-asset account tracking total depreciation
• Must be a fixed asset account (typically 150-199 range)
• Usually directly follows the asset account
• Example: 162 "Accumulated Depreciation - Motor Vehicles"

Depreciation Expense Account

• Expense account for monthly depreciation charges
• Must be an expense account (typically 600-699 range)
• Example: 610 "Depreciation Expense"

Private Use Account (optional)

• Only required if you plan to have mixed-use assets (business use < 100%)
• Records the personal use portion that can't be depreciated

How to Create an Asset Type

Step 1: Navigate to Asset Types

1. Go to Fixed Assets
2. Click Asset Types
3. Click New Asset Type

Step 2: Enter Basic Details

1. Entity - Select which business entity this applies to
2. Name - Enter a descriptive name (e.g., "Motor Vehicles")

Step 3: Set Depreciation Defaults

1. Method - Choose straight-line or diminishing value
2. Either:

• Useful Life: Enter number of years (e.g., 5)
• OR Depreciation Rate: Enter percentage (e.g., 20%)

These are defaults that will auto-populate when creating assets, but can be overridden per asset.

Step 4: Map Accounts

1. Asset Account - Select the fixed asset account for this type
2. Accumulated Depreciation Account - Select the contra-asset account
3. Depreciation Expense Account - Select the expense account
4. Private Use Account (if needed) - Select a capital/equity account for mixed-use assets

Step 5: Save

Click Save to create the asset type. It's now ready to use when creating fixed assets.

> 💡 Tip: Check IRD's depreciation rates for guidance on appropriate rates for New Zealand tax purposes.

Important Things to Know

Private Use Account Cannot Be Added Later

The private use account field is optional when creating an asset type, but:

• If not set: You can only create 100% business use assets for this type
• If set: You can create assets with any business use percentage (1-100%)

Recommendation: For asset types where mixed use is possible (vehicles, equipment), always include a private use account. You cannot add it later without recreating the asset type.

Defaults Can Be Overridden Per Asset

Asset type settings (depreciation method, rate, useful life) are defaults that auto-populate when creating assets. Individual assets can override these settings.

However, account mappings cannot be overridden per asset. The accounts defined in the asset type are used for all assets of that type.

Troubleshooting

"A fixed asset type with this name already exists"

Each asset type must have a unique name within an entity.

Solution: Choose a different name or check if an existing asset type meets your needs.

"A fixed asset type assigned to this asset account already exists"

Each asset account can only be used by one asset type.

Solution:

• Choose a different asset account for this asset type
• Or use the existing asset type that's already mapped to this account

"Cannot edit/delete fixed asset type with assigned assets"

This asset type has assets assigned to it and cannot be modified or deleted.

Solution:

• To edit or delete: Assigned fixed assets will need to be deleted, and then reassigned (in the case of editing)

Next Steps

Once you've created your asset types, you're ready to:

→ Start adding fixed assets to your register

Your asset types will provide defaults and account mappings, making it quick to add individual assets.