How do I account for Depreciation in LedgerSMB?

Submitted by Chris Travers on Wed, 04/25/2007 - 05:24
This content is outdated and kept here for reference only!

NOTE: LedgerSMB has a Fixed assets module as of 1.3. The FAQ below is out-dated.

LedgerSMB does not have a built-in assett tracking / depreciation feature. Depreciation can be managed manually using General Ledger Transactions. You should probably confirm this with your accountant, but the basic procedure (kindly suggested by Tony Fraser) is, assuming a computer asset over 5 years:


Set up 3 accounts:

  • An asset account such as "Computers"
  • An asset account such as "Accumulated Amortization, Computers" that is normally a negative balance therefor it is a contra account
  • An expense account such as "Computer Depreciation"

Upon purchasing a depreciable asset (in this case, a computer):

Account Debit Credit Notes
On purchasing the computer
Computers 1000.00    
Bank Account   1000.00  
End of Year 1
Computer Depreciation 400.00   (40% of $1000)
Accumulated Amortization, Computers   400.00  
End of Year 2
Computer Depreciation 240.00   (40% of $600)
Accumulated Amortization, Computers   240.00  
End of Year 3
Computer Depreciation 144.00   (40% of $360)
Accumulated Amortization, Computers   144.00  
Disposal
Bank Account 75.00   (sale of computer)
Accumulated Amortization, Computers 784.00   (reversing entry)
Computer Depreciation 141.00   (residual value)
Computers   1000.00 (reversing entry)

 

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