Registering a fixed asset

Registering a fixed asset

Create a new fixed asset record to track the acquisition, depreciation, and eventual disposal of equipment, vehicles, buildings, or other assets held for more than one year. When you register an asset and mark it active, its acquisition cost is automatically posted to the general ledger, capitalizing the cost to your fixed-asset account.

Before you start

• You must have fixed assets administration permissions (typically granted to accounting managers or administrators).
• Create or confirm the asset category for your asset (for example, Vehicles, IT Equipment, Furniture). Categories determine which general ledger accounts are used for depreciation and expense posting. See Asset categories and useful life for guidance.
• Have ready: asset name, acquisition date, acquisition cost, useful life in months, salvage value (if any), and the funding account (the account credited when the asset is acquired—typically Cash, Accounts Payable, or a financing account).
• Decide whether the asset will depreciate using the straight-line method or will not depreciate at all.

Steps

1. Go to Fixed Assets → Asset Register (or Accounts → Fixed Assets). Open in Usystems

2. Click New Asset or Add Asset.

3. Fill in the required fields:

   • Asset Name: A clear, descriptive name (e.g., "Company Van," "Office Building," "Server Cabinet").
   • Asset Code: The system auto-generates a code (e.g., "FA-0001"). You may customize it if your organization requires a specific naming scheme.
   • Category: Select the asset category (see step above). This determines the default depreciation method and useful life.
   • Acquisition Date: The date you acquired or put the asset into service.
   • Acquisition Cost: The total cost capitalized (purchase price, delivery, installation, and any other direct costs to bring the asset into use).
   • Useful Life (months): How many months the asset will be depreciated. For example, a vehicle might be 60 months; office furniture, 120 months.
   • Salvage Value: The estimated residual value after the asset is fully depreciated (optional; defaults to zero). Depreciation is calculated on the cost minus salvage value.
   • Depreciation Method: Select Straight-line (recommended) to spread depreciation evenly over the useful life, or None if the asset does not depreciate.
   • Depreciation Start Date: The date depreciation begins (typically the acquisition date, but may differ if the asset is not yet in service).
   • Funding Account: The account credited when the asset is acquired (e.g., Cash, Accounts Payable). This is where the cost is drawn from.
   • Custodian (optional): The person responsible for the asset.
   • Location (optional): The physical location or department where the asset is held.

4. Leave the asset in Draft status initially to review before posting. When you are ready to record the acquisition in the general ledger, change the status to Active.

5. Click Save. The asset is now registered. If you set the status to Active, the acquisition cost is immediately posted: the fixed-asset account is debited and the funding account is credited.

After registration: next steps

• View the posted journal: Once the asset is active, you can view the acquisition journal entry on the asset's details page.
• Add subsequent costs: If you capitalize additional costs (e.g., repairs or improvements), use the Add Cost action on the asset details page to add and post them.
• Run depreciation: At the end of each accounting period, run depreciation via Fixed Assets → Run Depreciation to record the month's depreciation expense and accumulated depreciation.
• Monitor the schedule: View the projected depreciation schedule on the asset's details page to forecast future depreciation.

Accounting impact

When you register an asset with status Active:

• Debit (increase): Fixed-asset account (balance-sheet asset).
• Credit (decrease): Funding account (typically Cash or a liability).
• The journal entry is balanced and final; editing the acquisition cost afterward requires reversal and re-posting.

Depreciation is posted separately each month; see the article on depreciation for details.

Tips & common mistakes

• Capitalize all acquisition costs: Include delivery, installation, permits, and professional fees necessary to bring the asset into use. These are part of the capitalized cost, not immediate expenses.
• Choose the right useful life: Consult your organization's accounting policies or tax guidelines for standard useful lives in your industry. For example, vehicles are commonly 5–7 years; buildings, 20–50 years.
• Do not use "Draft" as a permanent status: Assets in Draft status do not accrue depreciation and do not appear in fixed-asset reports. Use Draft only for planning; change to Active once the asset is in service.
• Separate asset categories by depreciation rule: If two assets have different useful lives or depreciation methods, place them in different categories so the system can post to the correct accounts and calculate depreciation correctly.