Fixed assets are long-term tangible assets that a business owns and uses to produce goods and services. These assets cannot be quickly converted into cash. Instead, they serve the business in the long run by generating profitable revenue. Some examples of fixed assets include buildings, machinery, vehicles, and furniture. Products that you sell in your business are not considered fixed assets.
Zoho Books now allows you to record fixed assets and automatically calculate depreciation for them. You can sell or write off the asset when it is likely to generate a profit, after it has completed its useful life, or when it has been fully depreciated.
To start recording fixed assets in your organization, you must first enable it in Preferences. Here’s how:
Once you’ve enabled the Fixed Assets, you can start creating fixed assets for your organization.
If you have multiple fixed assets that belong to the same category or follow a similar depreciation pattern, you can create a fixed asset type and associate the fixed assets with the respective type.
You can create a fixed asset type in two places:
To create a fixed asset type:
| Fields | Description |
|---|---|
| Fixed Asset Type Name | Enter the name of the fixed asset type. |
| Depreciation Method | Select the depreciation method for your asset. Straight Line Depreciation: The asset’s value is evenly depreciated until the end of the asset’s life. Declining Balance Depreciation: The asset’s value depreciates rapidly during the initial stage of its useful life slowly in the later stage. In this method, depreciation is calculated each year by applying a constant percentage to the asset’s current value. |
| Depreciation Percentage | Enter the percentage at which the asset should be depreciated every year. Note: This field appears only when you have selected the Depreciation Method as Declining Balance Method. |
| Depreciation Frequency | Select the frequency of depreciation. Monthly: Depreciation is calculated on a monthly basis. Yearly: Depreciation is calculated on a yearly basis. |
| Computation Type | Select the type of computation you want to apply and track the asset’s depreciation. Pro Rata: Depreciation is calculated based on the exact number of days the asset is used. Non Pro Rata: Depreciation is calculated based on the average number of months or years the asset is used. |
| Asset Life | Enter the asset life in months. |
| Depreciation Account | Select the account to track the asset’s depreciation over time. |
| Expense Account | Select the account to track the expenses associated with the asset’s depreciation. |
You can also create a fixed asset type on the fixed asset Creation page. Here’s how:
The fixed asset type is now created and associated with the new fixed asset. You can provide the other required details and proceed to save the fixed asset in your Zoho Books organization.
You can perform various actions on the fixed asset types you create in Zoho Books:
To edit a fixed asset type:
To delete a fixed asset type:
Note: The fixed asset type cannot be deleted if it is associated with any fixed asset. To delete the fixed asset type, first delete the fixed asset associated with it.
To create a fixed asset:
| Fields | Description |
|---|---|
| Name | Enter the name of the fixed asset. |
| Fixed Asset # | The fixed asset number will be auto-populated. You can also click the Gear icon to enter the fixed asset number manually. |
| Disposal Value | Enter the remaining amount of the asset after its useful life or the value after it’s fully depreciated. |
| Purchase Date | Select the date on which the asset was purchased. |
| Purchase Price | Enter the price at which you purchased the asset. |
| Current Value | Enter the current price of the fixed asset. Note: The current value is the price at which depreciation begins for the fixed asset. |
| Fixed Asset Type | If you have multiple fixed assets that belong to the same category or follow a similar depreciation pattern, you can create a fixed asset type and associate the fixed assets with the respective type. Note: If you’e already created a fixed asset type, the respective depreciation and account details of the fixed asset will be auto-populated. You can also change these details if required. |
| Warranty Expires On | Select the warranty expiration date for the asset. |
| Fixed Asset Account | Select the account to track the fixed asset. |
| Notes | Provide notes for the fixed asset you create for internal use. |
| Reporting Tag | Associate reporting tags to the fixed assets you create. |
| Serial Number | Enter the serial number for the fixed asset for internal use. |
The fixed asset is now created in Draft status, and you can view it in the Draft Assets tab of the Fixed Assets module. Journals for the acquisition or depreciation of the fixed asset will not be recorded until it is marked as Active.
You can create fixed assets from bills by associating the bill’s line item to a fixed asset account.
If you want to record fixed assets in a different account, create a new account in the Chart of Accounts module and set the Account Type as Fixed Asset. To do this:
Once you’ve created an account, you will have to create a bill. To do this:
Once you’ve saved the bill, the line item will be created as a fixed asset, and you can view it in the Draft Asset tab of the Fixed Assets module.
Note: Fixed assets can only be created for a line item of a bill that is in Open status.
You can perform various actions on the fixed assets in your Zoho Books organization:
To edit a fixed asset:
Note: You will only be able to edit the assets that are in Draft status. Once you mark a fixed asset as active, you will not be able to edit it.
To delete a fixed asset:
Note: You can only delete the assets that are marked as Draft and Canceled. Once you mark a fixed asset as active, you will not be able to delete it.
When you create a fixed asset, it will be saved in Draft status by default. To start calculating depreciation for the fixed asset, you can mark it as active, and Zoho Books automatically starts calculating the depreciation value based on the preferences you’ve set. Journal entries for the asset’s depreciation will be automatically created from the start date to the current date. You can view these journals under the Depreciation History section of the Depreciation tab.
To mark a fixed asset as active:
The fixed asset will now be moved from the Draft Asset tab to the Asset Register tab.
The depreciation flowchart shows the depreciation of an asset over time. The x-axis represents the depreciation date based on the depreciation frequency you’ve set, while the y-axis represents the asset’s current value.
To view the depreciation flowchart:
The depreciation flowchart will be displayed.
When you mark a fixed asset as active, the asset’s depreciation rates calculated from the start date till the current date will be displayed in this section.
To view the associated journal entries:
View Depreciation Forecast Zoho Books also forecasts the asset’s depreciation rates based on its useful life and other depreciation configurations like the Disposal Value provided when creating the fixed asset. This provides an overview of how the depreciation rates for the fixed assets will be calculated for the upcoming months or years.
To view the depreciation forecast:
You can now view the forecasted depreciation rate for the fixed asset you created.
When a fixed asset can no longer be used in your business, you can write it off. Once a fixed asset is written off, depreciation entries after the write-off date will be deleted, while the depreciation entries up to the write-off date will remain available under Depreciation History.
To write off a fixed asset:
| Fields | Description |
|---|---|
| Expense Account | Select an account to track the expenses associated with the written-off fixed asset. |
| Write Off Date | Select the date on which you want to write off the fixed asset. The amount for which the asset is written off will be displayed below this field. |
| Reason | Enter the reason to write off the fixed asset. |
The fixed asset’s status will be changed to Written Off.
If you want to remove the depreciation rates and journals recorded for your fixed assets, you can cancel them. Here’s how
The fixed asset will be marked as Canceled. If you later want to start calculating depreciation for the canceled fixed asset, convert it to Draft status and mark it Active again.
Note: You can delete the fixed assets that are marked as Canceled.
Prerequisite: To sell a fixed asset, you have to create an invoice with a line item associated with the fixed asset account.
When the asset it no longer required or it is likely to generate profit, you can sell the fixed asset from your Zoho Books organization.
To do this:
| Fields | Description |
|---|---|
| Invoice | Select the invoice associated with selling the fixed asset. |
| Line Item | Select the fixed asset as a line item in the invoice. |
| Gain/Loss Account | Select an account to track the gain or loss associated with selling the fixed asset. |
| Sell Date | The date on which you are selling your fixed asset will be auto-populated. The price at which the asset is sold will be displayed with the gain or loss amount below this field. The gain or loss amount is the difference between the asset’s actual sale value and the cost of the asset at the date of sale. Note: The sell date will be fetched from the invoice created for selling the asset. |
| Reason | Enter a reason for selling your fixed asset. |
The fixed asset’s status will be changed to Sold.
You can view reports for the fixed assets recorded in your Zoho Books organization in the Reports module. To do so:
The list of fixed assets recorded in your organization will be displayed.
The different sections that the report contains are as follows:
| Report Sections | Description |
|---|---|
| Name | The name of the fixed asset. |
| Status | It displays whether the asset is in the Active, Fully Depreciated, Written Off, or Sold status within the selected date range. |
| Fixed Asset Type | It displays the fixed asset type of the fixed asset. |
| Purchase Date | It displays the purchase date of the asset. |
| Purchase Value | It displays the price at which the fixed asset was bought. |
| Current Asset Value | It displays the current price of the fixed asset. |
| Opening Asset Value | It displays the price of the asset at the beginning of the selected date range. |
| Depreciation Value | It displays the price at which the fixed asset is depreciated in the selected date range. |
| Closing Asset Value | It displays the price of the asset at the end of the selected date range. |
| Acquisition Value | It displays the acquisition price of the asset in the selected date range. |
| Write Off Value | It displays the price at which the fixed asset was written off. |
| Sale Value | It displays the price at which the asset is sold. |
To customize the report:
| Fields | Description |
|---|---|
| Date Range | Select the start date and end date to generate the report. |
| Group By | Select Fixed Asset Type in the Group By dropdown. |
| Status | Select the status to generate the report. The available statuses are: All, Active, Write Off, Sold, and Fully Depreciated. |
The report will be generated based on the preferences you’ve set.
You can also choose the columns you want to display in the report and hide the other columns. To do this:
The report contains amounts for the depreciation, acquisition, write-off, and sale of the fixed assets. You can click on a fixed asset to view the respective drill down summary.
This report summary contains the following sections:
| Fields | Description |
|---|---|
| Valuation Date | This section displays the date on which the asset was valuated. |
| Type | It displays the type of valuation that is associated with the fixed asset. The valuation types are: Depreciation, Acquisition, Write Off, and Sale. |
| Current Value | It displays the value of the fixed asset after valuation. |
| Net Asset Value Change | It displays the difference in the asset value after a valuation for various types, such as Depreciation, Acquisition, and more. |
| Accumulated Depreciation | It displays the total amount of depreciation expense accumulated since the asset was marked as active. |
To customize this report:
| Fields | Description |
|---|---|
| Date Range | Select the start date and end date for which you want to generate the report. |
| Valuation Type | Select the valuation type of the report. The available types are: All, Depreciation, Acquisition, Write Off, and Sale. |
The report will be generated based on the preferences you’ve set.