Depreciation

When you buy something the business will use for years, such as a vehicle, machinery or computers, it is a fixed asset. Instead of counting the whole cost as an expense in the month you bought it, you spread the cost over the asset’s useful life. That gradual expense is depreciation.

Bokapsys builds a month-by-month depreciation schedule for each asset and posts each month’s depreciation to your books. You find it under Accounting → Allocation Schedules → Depreciation.

Before you start

• You need a role with access to allocation schedules. See Team and roles.
• In your Chart of Accounts, you need a depreciation expense account on the Income Statement and an accumulated depreciation account on the Balance Sheet. Accumulated depreciation is the running total of depreciation taken so far; it reduces the asset’s value on the Balance Sheet.

Create a depreciation schedule

1. Click New schedule.
2. Under Asset information, enter a Description, choose a Category (such as Vehicles or Computer Equipment), and enter the Purchase date and Initial cost.
3. Under Depreciation parameters, choose a Method and enter the Useful life (years), the Duration (periods / months), the Residual value (% of cost) and the Depreciation start date.
4. Under GL accounts, choose the Depreciation expense (I/S) account and the Accumulated depreciation (B/S) account. Both are required. You can also record the Fixed asset account (B/S) the asset sits in.
5. Click Calculate preview. Bokapsys shows every period with its monthly depreciation, the accumulated total and the Net book value (what the asset is still worth on your books).
6. If the preview looks right, click Save schedule.

Depreciation methods

• Straight-line (SLN): the same amount every month. The simplest and most common choice.
• Declining balance (DB): larger amounts early in the asset’s life, getting smaller over time.
• Double declining balance (DDB): like declining balance, but faster in the early years.
• Sum-of-years-digits (SYD): also front-loaded, reducing by a steady step each year.

Residual value is what you expect the asset to be worth at the end of its life. Bokapsys never depreciates an asset below it. If you are not sure which method to use, ask your accountant; many small businesses use straight-line.

Post depreciation

Each schedule creates one entry per month. An entry is posted only once its date has arrived, so future months wait until they are due. Each posted entry debits your depreciation expense account and credits accumulated depreciation.

How due entries reach your books depends on your posting settings. On Auto-post Bokapsys posts them for you; on Manual they wait. Whenever entries are waiting, a banner shows the count with View pending and Post Now. Entries dated in a closed accounting period are not posted until the period is reopened.

Manage saved schedules

The Saved schedules list shows each asset with its cost, method, duration, start date and status. Use the icons on each row to:

• View the full schedule, including which periods are already posted. From here you can Download PDF.

• Edit the description, category or accounts. New postings use the new accounts. To change the cost, duration or start date, void the schedule and create a new one, so your audit trail stays clean.

• Void the schedule. Bokapsys posts reversing entries for any months already posted, so the depreciation is removed from your books without deleting history.

Note

While a schedule is active, the accounts it uses cannot be deleted from your Chart of Accounts.

Related

Prepaid expensesSpread a prepayment across the months it covers.

LoansBuild a loan repayment schedule.

Posting settingsAutomatic or manual posting for depreciation.

Financial reportsSee depreciation on your Income Statement and Balance Sheet.