FAQ: Registering Assets

FAQ: Registering Assets

What is the difference between "Draft" and "Active" status when registering an asset?

Draft status means the asset record is created but not yet posted to the general ledger. No journal entry has been made, and the asset does not accrue depreciation. Use Draft to set up the asset details and review them before posting.

Active status means the asset's acquisition cost has been posted to the general ledger (the fixed-asset account is debited and the funding account is credited). The asset now begins to accrue depreciation each month. Use Active once the asset is in service and you are ready to record it formally in your accounts.

You can change an asset from Draft to Active by editing it and updating the status field.

Do I include delivery and installation costs in the acquisition cost, or should they be expensed separately?

Include them in the acquisition cost. Delivery, installation, permits, professional fees, and any other direct costs to bring the asset into use are all capitalized (added to the asset's cost) rather than expensed immediately. This is called "capitalization." The logic is that these costs are necessary to make the asset usable, so they become part of the asset's value.

For example, if you buy a vehicle for $20,000 and pay $500 for delivery and $800 for registration, the acquisition cost is $21,300, not $20,000.

What should I enter for "Useful Life"?

Useful life is the estimated number of months (or years) the asset will be used in the business. It determines how many periods the depreciation expense is spread over.

Check your organization's accounting policies or local tax guidelines for standard useful lives. For example:

• Vehicles: 60 months (5 years)
• Office furniture: 120 months (10 years)
• Computers: 36 months (3 years)
• Buildings: 240 months (20 years)

If you're unsure, consult your accountant or tax advisor.

Can I change the useful life or acquisition cost after registering an asset?

Yes, but with caveats:

• If the asset is still in Draft status, you can edit any field freely without affecting the general ledger (no journal has been posted yet).
• If the asset is Active (the acquisition has been posted), changing the acquisition cost requires reversal of the original entry and re-posting. Usystems supports this, but it generates additional journal entries. Avoid frequent changes once posted.
• Changing the useful life on an active asset affects only future depreciation calculations. It does not recalculate past depreciation already recorded.

Best practice: Review all asset details carefully before setting the status to Active.

What is "Salvage Value"?

Salvage value is the estimated amount you expect to receive (or pay) when the asset is disposed of at the end of its useful life. For example, if you buy a vehicle for $20,000 and expect to sell it for $4,000 in five years, the salvage value is $4,000.

Depreciation is calculated on the depreciable base: Acquisition Cost − Salvage Value. In the example above, the depreciable amount is $16,000 (spread over 60 months = $267/month).

If you don't know the salvage value, you can leave it at zero (the entire cost is depreciated).

What does "Depreciation Method: None" mean?

Some assets do not depreciate:

• Land (typically held indefinitely and does not wear out).
• Artwork, antiques, or collectibles (may appreciate or remain constant).
• Assets that will be held for one accounting cycle only (e.g., inventory held as a fixed asset temporarily).

If you set Depreciation Method = None, the asset is never depreciated. The acquisition cost remains on the balance sheet as long as the asset exists. Choose this method only if the asset truly does not decline in value over time.

Can I add costs to an asset after it is registered?

Yes. If you capitalize additional costs later (e.g., a major repair, upgrade, or improvement), you can use the Add Cost action on the asset's details page. This creates a cost event and posts it to the general ledger, increasing the asset's book value. Depreciation will then be recalculated based on the new capitalized cost.

Routine maintenance and repairs are usually expensed, not capitalized. Capitalize only costs that extend the asset's useful life or improve its functionality significantly.

How do I depreciate an asset each month?

Depreciation is posted separately after the asset is registered. At the end of each accounting period (typically monthly):

1. Go to Fixed Assets → Run Depreciation. Open in Usystems

2. Select the period (e.g., "2026-07" for July 2026).

3. Click Run Depreciation. The system calculates depreciation for all active assets in that period and posts the journals automatically.

Is it idempotent? Yes. Running depreciation for the same period twice is safe; the second run is a no-op (does nothing) because the entry already exists.

What accounts are used when I register an asset?

When you register an asset with status Active, two accounts are involved:

• Debit (increase): Fixed-asset account (e.g., "1500 Fixed Assets") — the capitalized cost.
• Credit (decrease): Funding account (e.g., "1000 Cash" or "2000 Accounts Payable") — where the money comes from.

The funding account is a field you select when creating the asset. For example, if you buy equipment by check, the funding account is Cash. If you buy on credit, it's Accounts Payable.

Which accounts are used for depreciation? See the depreciation article for details.

What happens if I delete an asset?

Deleting an asset reverses all of its posted journals (acquisition, costs, depreciation, and disposal). The asset is soft-deleted (marked as deleted but not removed from the database), and it no longer appears in asset lists or reports.

Can I undo the deletion? No. Deletion is permanent from a user perspective. If you accidentally delete an important asset, contact your system administrator.

Can I move an asset to a different category?

No. The category is fixed when you create the asset. If you need to recategorize, you must delete the asset and re-register it in the new category.

However, you can override the account mappings on individual assets. For example, if one vehicle should use a different depreciation-expense account than the standard vehicle category, you can override the account on that specific asset without changing the category.

What if an asset is partially destroyed or abandoned before the end of its useful life?

You can use the Dispose action on the asset's details page to record a write-off or disposal. This:

1. Posts the accumulated depreciation and loss to the general ledger.
2. Removes the asset from active depreciation.
3. Marks the asset as disposed.

Select Disposal Type = Write-off if the asset has no recovery value, or Disposal Type = Sale if you receive proceeds (e.g., scrap value or sale price). The system calculates gain or loss and routes it to the appropriate account.