Fixed Assets

Assets such as land, buildings, machinery, vehicles, licenses, and patents purchased by an enterprise to continue its activities constitute the fixed assets of that enterprise. Fixed assets such as buildings, machinery, equipment are called "Real Assets", Fixed assets such as licenses, copyrights, software are called "Intangible Assets".

Fixed assets are an important criterion when determining the value of a business. The values of lands and buildings increase; As the machines are used, their value decreases. This process requires depreciation and revaluation. Workcube does not approach fixed assets only with an accounting focus. Fixed assets have problems, so they should be maintained and insured. For example, a company that sells computers can convert a computer into a fixed asset. They can sell the fixed asset after using it for a period of time. Workcube business functions approach fixed assets with a broad perspective.

In Workcube, the entire life history of a fixed asset, including depreciation and valuation processes, from its acquisition to its redemption, is followed in an integrated manner with accounting records.

Valuation and Depreciation in Fixed Assets
The rules regarding valuation and depreciation are determined by the legislation. Depreciation has two dimensions. Method and Period.

The following methods are available in Workcube:

Declining Balance
Fixed Amount
Double Declining Balance
Accelerated Constant Value

Period
It is the number of times the depreciation method is applied in a financial year. In W3, Depreciation can be made once a year - Annually, 4 times - quarterly, 12 times - every month.

Two depreciation methods are adopted; normal and declining balance. You can examine the example below to see the difference between both methods.

Case Study
The depreciation period for a crane purchased for 1,000 USD is 5.5 years. In this case, the depreciation rate is 18%.

According to the normal method; Depreciation will be 1,000 x 0.18=180 USD for the first five years and 100 USD for the last year.

The depreciation period of the fixed asset is taken according to the diminishing balance method. The depreciation rate is found by dividing the depreciation purchase value by the period and multiplying it by 2. 

The amount of depreciation allocated in both methods is equal to the purchase price of depreciation. The diminishing balance method allows more depreciation to be written off as an expense in the first years.

Before Use

• Transaction Types
• Accounting Account Definitions

Module Functions

• Fixed Assets
• Fixed-Asset Purchases
• Fixed-Asset Sales
• Fixed Asset to Inventory Return Receipt
• Inventory to Fixed-Asset Conversion Receipt
• Fixed-Asset Transactions
• Fixed Asset Update
• Depreciation and Valuation
• Fixed Asset Period Carryforward Transactions

Associated Functions in Other Modules

• Stocks
• Physical Assets
• Accounting transactions
• Subscriptions (for fixed assets used in subscription management)

Tip

You cannot delete or update fixed assets that have been sold or valued.

Important

Make sure that your fixed assets, depreciation amounts or value increases after revaluation are recorded correctly in the accounting accounts. Transactions recorded in incorrect accounts entail legal liability.

Suggestion

You can also define fixed assets as physical assets and manage transactions such as warranty, debt, malfunction, maintenance with the relevant modules and functions of W3.