The Fixed Assets feature helps you understand the actual value of your assets, display profits accurately, organize financial reports, follow proper accounting practices, and reduce manual accounting work.
What is the Fixed Assets Feature?
This feature helps you record long-term business assets, such as cashier devices, refrigerators, kitchen equipment, shelves, computers, vehicles, and more.
Instead of recognizing the full asset value as an expense on the purchase date, the system distributes the asset cost over its actual usage period through depreciation.
What is Depreciation?
Depreciation is the process of distributing the asset cost over several years or months based on its expected useful life.
Example:
You own a restaurant and purchased an oven for SAR 12,000 with an expected useful life of 4 years.
The system distributes the cost automatically as follows:
SAR 12,000 ÷ 48 months = SAR 250
(Asset value ÷ Expected useful life = Monthly depreciation)
Each month:
The asset value decreases.
A depreciation expense is recorded in financial reports.
Steps to Record an Asset
Go to Accounting > Fixed Assets.
Click New Asset.
Enter the asset name and classification.
Record how and when the asset was acquired.
Add the cost center and attachments.
Enter depreciation details. The asset cost will be distributed automatically over its usage period.
Click Save.
How Depreciation Is Calculated
The system calculates depreciation using the Straight Line Method, which means the same depreciation amount is distributed equally every month.
Automatic Journal Entry Creation
Depreciation entries are created automatically, such as:
Debit: Depreciation Expense
Credit: Accumulated Depreciation
This ensures financial reports are displayed correctly.
Example in the Restaurant Industry
Example 1: Restaurant Refrigerator
If you purchase a refrigerator for SAR 24,000 with an expected useful life of 5 years, the system calculates:
Annual depreciation = SAR 4,800
Monthly depreciation = SAR 400
Each month:
SAR 400 is recorded as an expense.
The asset book value decreases gradually.
Example 2: Kitchen Equipment
If you purchase items such as grills, ovens, coffee machines, and more:
Instead of charging the business with the full cost in one month, the cost is distributed across the years of usage, providing a more accurate view of actual business profits.
Example in the Retail Industry
Example 1: Cashier Devices
If you purchase 5 cashier devices worth SAR 15,000, the system:
Records them as assets.
Calculates monthly depreciation automatically.
Example 2: Shelves and Store Equipment
If you spend money on shelves, décor, and barcode devices:
These are treated as assets rather than daily operating expenses, so they are depreciated over multiple years.
How the System Handles Assets
The process goes through the following stages:
When you add an asset:
The system calculates depreciation automatically.
The system creates accounting entries.
Updated values appear in financial reports.
How Depreciation Is Calculated Based on the Actual Start Date
Depreciation is calculated starting from the asset’s actual operation date in the business, not from the asset purchase date.
This is important because some assets are purchased before they start being used.
Example:
If you purchased an oven on January 1, but started using it on March 1, the system starts calculating depreciation from March 1, not from the purchase date.
This provides more accurate cost calculations and reflects the asset’s actual usage in your business.
Depreciation and VAT Calculation
Depreciation is calculated based on the asset value before tax because purchase tax is not considered part of the asset cost if the business can recover it for tax purposes.
The tax is recorded from the purchase date, not from the asset operation date.
Example:
If you purchased a device for SAR 10,000 and VAT was SAR 1,500, the system calculates depreciation based on SAR 10,000 only, and records SAR 1,500 as recoverable tax on the purchase date, even if the device is activated later.
FAQs
Does the depreciation calculation method differ between assets?
Currently, no. The feature supports the Straight Line Method only, where the same depreciation amount is distributed equally every month.
Are depreciation calculation results reflected in financial reports?
Yes. After depreciation is calculated and journal entries are created, updated values appear in financial reports.