Often, due to the absence of a Fixed Asset module within accounting software or an ERP, companies record their assets using manual journal entries. Consequently, asset depreciation is also calculated and journaled manually every month. This is certainly inefficient and eliminates a system’s ability to control a company’s valuable assets. Therefore, in this article, we will discuss how to use the Fixed Asset module available in one of the best open-source ERPs, iDempiere.
The Fixed Asset module menus that we will discuss this time consist of: Asset Group, Asset, Asset Addition, and Post Depreciation Entry.
Asset Group Asset Group is a menu used to categorize the assets owned by the company. To determine if an asset group is subject to depreciation, check the “Depreciate” box. Enter the useful life of the asset group in the Group Account tab, and also specify the accounts for the asset, accumulated depreciation, and the depreciation expense itself. The depreciation method is also set here; by default, iDempiere only provides the Straight Line method.
Asset Within the Asset menu, you will find a list of the company’s assets along with their attributes, such as asset code, asset name, Asset Group, acquisition date, location information, the person in charge, acquisition value, and more. To add a new asset, create an entry in this menu and fill in the required information. The Location Comment column is used to specify the physical location of an asset. This information is crucial, especially for companies with multiple branches or assets distributed among various employees. Additionally, ensure you assign a Business Partner as the PIC (Person in Charge) or the current holder of the asset. Make sure to select the appropriate Asset Group, as this will determine the asset’s useful life and depreciation.
Asset Addition After adding your asset in the Asset menu, the next step is to create an Asset Addition. In the Asset Addition menu, fill the Asset column with the asset you created earlier. Set the Document Date to the asset’s acquisition date and make sure to select “Manual” for the Source Type. Enter the asset’s acquisition value in the Entered Amount field. Once everything is filled out, execute the Document Action: Complete. If you check the Asset menu again, your asset should now show an Asset Status of “Activated,” and the Expense tab will display the depreciation schedule for the asset based on its useful life.
Post Depreciation Entry The final step after adding an asset occurs at the end of the accounting period, when you need to journal the asset’s depreciation. Using the Post Depreciation Entry menu, simply open the module and create a new entry. Ensure you enter the correct date and period for the depreciation journal. After clicking Save, the document lines will auto-generate to include all assets subject to depreciation for that month. You simply need to review the lines to ensure all relevant assets are included. If everything is correct, execute the Document Action: Complete to post the depreciation expense against the accumulated depreciation for all included assets.
These are the menus available within the Fixed Asset module in iDempiere. If you are currently using a system that lacks a dedicated Fixed Asset module, it is time to switch to a more robust system like iDempiere, so you no longer have to manage critical data like your assets, outside of your main system.