The fixed assets feature helps you determine the true value of your assets, accurately display your profits, organize your financial reports, and adhere to correct accounting practices while reducing manual work for the accountant.
What is the Assets Feature?
It is a feature that helps you record the long-term properties of the activity, such as: cash registers, refrigerators, kitchen equipment, shelves, computers, cars... etc. Instead of considering the asset's value as a full expense on the day of purchase, its cost is distributed over its actual usage period through what is called depreciation.
What is Depreciation?
It is the distribution of the asset's cost over several years or months according to its expected lifespan, for example:
You own a restaurant and bought an oven for 12,000 SAR, with an expected lifespan of 4 years,
The system automatically distributes the cost as follows:
12,000 SAR ÷ 48 months = 250 SAR
(Asset value ÷ expected lifespan = monthly depreciation)
Each month records:
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A decrease in the asset's value.
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Calculation of depreciation expense in financial reports.
Steps to Record the Asset
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Go to Accounting > Fixed Assets
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Click on New Asset
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Enter the asset's name and classification
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Record how and when the asset was acquired
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Add cost center and attachments
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Enter depreciation details, the asset's cost is automatically distributed over its usage period.
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Click on Save
Depreciation Calculation Method
The system calculates depreciation using the Straight Line Method, meaning the same depreciation amount is distributed evenly each month.
Automatically Creating Accounting Entries
Depreciation entries are created automatically, such as:
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Debit: Depreciation Expense
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Credit: Accumulated Depreciation
To ensure financial reports are accurate.
Example in the Restaurant Sector:
Example 1: Restaurant Refrigerator
If you bought a refrigerator for 24,000 SAR, with an expected lifespan of 5 years, the system calculates:
Annual Depreciation = 4,800 SAR
Monthly Depreciation = 400 SAR
Each month:
400 SAR is recorded as an expense, and the asset's book value decreases gradually.
Example 2: Kitchen Equipment
If you bought: a grill, an oven, a coffee machine… etc.
Instead of charging the entire cost in one month, it is distributed over the years of use, providing a more accurate picture of actual business profits.
Example in the Retail Sector
Example 1: Cash Registers
If you bought 5 cash registers for 15,000 SAR, the system:
Records them as assets and calculates monthly depreciation automatically.
Example 2: Shelves and Store Fixtures
If you spent an amount on: shelves, decor, barcode devices
These are considered assets and not daily operating expenses, thus they are depreciated over several years.
How Does the System Handle the Asset?
The process goes through the following stages:
When you add the asset:
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The system calculates depreciation automatically
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The system creates accounting entries
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Updated values appear in financial reports
Depreciation Calculation from Actual Operation Date
Depreciation is calculated from the actual operation date of the asset within the activity, not from the asset's purchase date.
This is important because some assets are purchased before they are used for a period, for example:
If you bought 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 a more accurate cost calculation and reflects the actual use of the asset within your business activity.
Depreciation and VAT Calculation
Depreciation is calculated on the asset's value before tax because the purchase tax is not considered part of the asset's cost if the establishment can recover it tax-wise. The tax is recorded from the purchase date, not from the asset's operation date.
For example: If you bought a device for 10,000 SAR, with a tax of 1,500 SAR, the system calculates depreciation on 10,000 SAR only and records 1,500 SAR as a recoverable tax directly on the purchase date, even if the device is operated later.
Frequently Asked Questions
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Does the depreciation calculation method differ from one asset to another?
Currently, no, because the feature supports only the straight-line method, where the same depreciation amount is distributed evenly each month.
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Do the results of the depreciation calculation appear in financial reports?
Yes, after calculating depreciation and creating accounting entries, updated values appear in financial reports.