Add a Fixed Asset

Adding a tangible fixed asset to the asset register using the following process ensures that the asset is visible in the register and that any depreciation is automatically calculated and posted to the accounts.

Expenditure - Assets - Add

The process is in two stages :-

Stage 1 - Add the details of the asset to the register
  1. Identify the asset in the Asset Details Tab, including the date in service
  2. Enter cost information on the Cost tab, this will serve as the asset original cost in any reporting
  3. Depreciation rules are entered in the Depreciation tab
  4. If necessary the default accounts can be amended in the Accounts tab
Stage 2 - Enter purchase information
On the Payment tab provide the details of the purchase transaction including any VAT if appropriate. Note if it is more convenient the purchase transaction can be added directly on some other occasion.

Adding the Purchase Transaction directly

Use a normal payment transaction ensuring that the selected account is always Asset Additions a current liability account. This is because when an asset is added to the Asset Register the balancing side is Asset Additions. When all the information for a new fixed asset has been added, including the purchase, the balance on the Asset Additions account (for this asset) should be zero.

Add Fixed Assets

This screen is used to create and maintain details about an asset including, where appropriate, the purchase. Accessing this screen via the opening balances control panel allows for details of assets to be entered as opening balances.

Some useful background information is available from Tangible Fixed Assets and an Asset Register

This screen consists of multiple tabs as follows: -

ASSET DETAILS
The asset name, description, acquisition date and date in service are entered together with any analysis that is appropriate
COST/VALUE
Original cost, estimated useful life and any residual value is entered; any revaluation amounts are displayed.
DEPRECIATION
A depreciation rule and parameters are set. In the case of an opening balance, the cumulative depreciation amount at the date of the opening balance is entered.
ACCOUNTS
Will usually remain as the default accounts, however where there is a user defined fixed asset grouping of accounts (Set up as Custom Accounts) this tab allows for setting up of posting to those accounts.
PAYMENT
When a newly purchased asset is being added to the asset register the posting details of the purchase may be entered simultaneously using this tab. If preferred a user can also enter the purchase subsequently as a normal purchase transaction.
DISPOSAL - only visible once an asset has been set up on the register
When an asset is disposed of enter any disposal value, the date of disposal and any P11D links

Asset Name

Enter a unique name for the asset or asset pool. This is required.

Asset Description

Enter description of the asset if required in addition to the name.

Asset Type

Select an appropriate asset type. This is required. The types of asset offered in the drop down list are associated with rules of depreciation and the calculation of capital allowances for taxation purposes. Accurate selection will enhance the accuracy of your accounts. If you are not sure which type to use then you should consult your advisor.

Statutory Reporting Area

Select a statutory reporting area for the asset. If you are not sure which area to assign to your asset you should consult your advisor. This is required.

Branch, Fund or Activity

Where Branch, Fund and/or Activity analysis is being used the asset may be allocated using the drop-down fields. System computed depreciation associated with the asset will be analysed to the selections.

Date Acquired

Enter the purchase date of the asset. This can be done manually (e.g 19/12/2016) or click on calendar icon to select date from the calendar. This is required.

Date In Service

Enter date asset entered into service. This can be done manually (e.g 19/12/2016) or click on calendar icon to select date from the calendar. This is required.

An asset is brought into service when it starts to be used for revenue generation purposes, therefore the date into service is not necessarily the date acquired. Assets are depreciated from the date into service not the date of acquisition.

Short Life Asset

Currently unused

P11D Classification for Employee Use - P11D Section L

If this asset is likely to made available for employees/directors to use in a private capacity, there may be a P11D income tax liability on the employee/director.

In reporting the P11D an asset classification is required, select the appropriate classification for this asset from the dropdown list.

Note setting this classification does not mean a P11D return will be created, this requires that the asset is allocated to the employee/director for a period and with a value, in the asset allocation screen.

If your are unclear as to the meaning of this, you are strongly advised to seek professional advice.


Original Value

Enter the original value of this asset net of VAT. This amount will be created as a liability in the Asset Additions Account and the VAT element is taken care of as part of the purchase transaction. This field is required.

Estimated Useful Life

Enter the estimated useful life of the asset in years. If you select the straight line depreciation rule this value is used for depreciation calculations. If you select the reducing balance rule this value is used to calculate a suggested reducing balance percentage which you may override. Check with your accountant is you are not sure what value to use. This is required.

Estimated Residual Value

Enter an estimate of the likely value of the asset after its useful life has expired. The default is zero. This is required.

Additional Expenditure

Enter any additional expenditure associated with the purchase of this asset, e.g. solicitors fees on purchase of a building. The amount will be added to the purchase cost of the asset for depreciation and net book value calculation purposes.

Revaluation

If an asset has been revalued this field will show the revaluation value of the asset.

Date Revalued

Displays the revaluation date for an asset if it has been revalued.

Where it is necessary to Re-value or Impair the value of an asset navigate to the Control menu.

Control - Batch Jobs - Revalue/Impair Asset

For more information on this topic see Re-Valuing/Impairing a fixed asset


Depreciation Rule

Select straight line or reducing balance depreciation rule as appropriate for the asset and your accounting policies. This is required.

Straight line depreciation allocates the amount to be depreciated in equal amounts over the life of the asset. Reducing balance uses a constant percentage amount for each time period which has the effect for depreciating more in the earlier time periods.

Reducing Balance Percentage

If the reducing balance depreciation rule is selected this field is used to define the annual depreciation rate used in depreciation calculations.

Cumulative Depreciation - used when entering opening balances

If you are setting up opening balances for assets you should enter the value of cumulative depreciation for the asset at the date for which you are setting up opening balances. This will ensure that further depreciation of the asset can be calculated properly. This is required.
For more information see ' Entering opening balances - Fixed Assets' process

Cumulative Depreciation Date - used when entering opening balances

If you are setting up opening balances for assets you should enter the date at which the cumulative depreciation was calculated. This can be done manually (e.g 19/12/2002) or click on calendar icon to select date from the calendar. This is required.


The Accounts tab will only be used where there is a user defined fixed asset grouping of accounts (Set up as Custom Accounts). The tab allows for setting up of posting to those accounts.


Disposed

Check this box to indicate that the asset has been disposed.

Disposal Value

If you have disposed of an asset enter the amount received. This is required if an asset is disposed.

Date Disposed

If you have disposed of an asset enter the date of the disposal. This can be done manually (e.g 19/12/2002) or click on calendar icon to select date from the calendar. This is required if an asset is disposed.

Employee for P11d Purposes

Select an employee/director to to whom this tranasaction is to be associated for P11D purposes.

Asset Transfer Type - P11D Section A

The P11D return requires a description of the type of asset being transferred to the employee/director. Select the appropriate type from the dropdown box to be displayed on the P11D.

If your are unclear as to the meaning of this, you are strongly advised to seek some professional advice.


The Accounts tab will only be used where there is a user defined fixed asset grouping of accounts (Set up from Add a Custom Accounts). The tab allows for setting up of posting to those accounts.


The payment tab records the purchase process for the asset. Note that the payment will deal with the main asset purchase not any additional expenditure added in the cost/value tab.

Payment Document

Select the payment document type.

Selecting a Bill will prevent a user from choosing a Bank Account in the Payment Account, as a Bill will posted to the Supplier Account.

Bank Account

The bank account list contains all active bank and credit card accounts associated with the business. An entry from the bank/credit card account list must be selected when the transaction involves making a payment from, or receiving money to a bank or credit card card account.

Reference

Enter any reference to be associated with the transaction.

Payee

The payee list contains any external entity, such as customers or suppliers, that are associated with the entity.

VAT Rate

The appropriate VAT rate for the account must be selected. Default VAT rates can be associated with an account via the Account Maintenance screen which is available from the chart of accounts view.

If the business is on the HMRC Flat Rate VAT Scheme, as defined on the VAT details tab of the Business Profile, the VAT rate will default to "Out of Scope" for all purchase transactions. This can be changed if necessary. Exceptions may apply for purchases of capital assets of significant value, please consult your professional advisor.

Current VAT Rates

20.0%, 5% & Zero, used for normal UK VAT transactions.

Exempt

Used when a transaction is an exempt supply; such as the purchase of insurance. See the VAT Guide (Notice 700) for more details or visit the Revenue and Customs site at www.hmrc.gov.uk

EU Acquisition

Used when you purchase goods from a VAT registered supplier in an EU member state. Make sure that the VAT code is set to EU Acquisition, and that the VAT amount shows the VAT which would have applied if the purchase had taken place in the UK. The correct country must be set on the supplier record to ensure correct reporting of the transaction.

EU VAT

Only used if you have you have incurred VAT in an EU member state, (i.e. local VAT). This CANNOT be recovered as input tax for UK VAT. You may make a claim for refund from the member state. A scheme exists to do this known as "Refunds of VAT in the European Community for EC and non-EC businesses" The details are in notice 723, refer to the Revenue and Customs site at www.hmrc.gov.uk Use of this VAT code is described more fully in the "VAT and Liberty Accounts" user guide.

Out of Scope

Used when a transaction is not in the VAT system at all. For example payments into a money purchase pension scheme are out of scope because they are equivalent to savings. Recording a payment of VAT to HMRC is a common example where Out of Scope should be used, as are salary payments and repayments of director loans. Using this code will result in no VAT reporting impact.

None

This code is used where there is no VAT on a purchase transaction, typically from a supplier who is not vat registered. This is not the same as zero rated, exempt or out of scope. The impact is that the value of the purchase is included in box 7 of the VAT 100 return.

Average

This code can be used where there the transaction is recording an aggregation of mixed VAT codes in a single entry with the VAT amount manually set as required.

Special Note - Reverse Charge for Purchases From Non EU Countries

Typically this is required for a purchase from a non-EU country where no VAT has been paid. It simply provides a means of accounting for the VAT that would have been paid if the good or service was purchased in the UK. Applying a reverse charge VAT process will have no impact on your VAT liability.

To use this feature simply set the VAT on the item(s) to the appropriate VAT rate(s) that would apply had the item been purchased in the UK and submit the transaction with the Reverse Charge VAT checkbox ticked (Located in the "Analysis" tab of the voucher in the top half of the screen).

If you subsequently view the item you will notice that the VAT rate has been set by the system to "Out of Scope". This is correct. If you need to make changes to the transaction you must reset the VAT codes to the appropriate code so that the Reverse Charge can be created again using the correct VAT amounts.

Reverse Charge VAT

Tick this flag if you want to generate reverse charge VAT postings for a purchase.

Typically this is required for a purchase from a non-EU country where no VAT has been paid. It simply provides a means of accounting for the VAT that would have been paid if the good or service was purchased in the UK. Applying a reverse charge VAT process will have no impact on your VAT liability.

To use this feature simply set the VAT on the item(s) to the appropriate VAT rate(s) that would apply had the item been purchased in the UK and submit the transaction with the Reverse Charge VAT box ticked.

If you subsequently view the item you will notice that the VAT rate has been set by the system to "Out of Scope". This is correct. If you need to make changes to the transaction you must reset the VAT codes to the appropriate code so that the Reverse Charge can be created again using the correct VAT amounts.