Fixed Assets & Depreciation

Track your company's long-term assets, calculate depreciation automatically, and post accurate journal entries to keep your books GAAP-compliant.

Adding an Asset

To record a new fixed asset in Kantivo:

1. Navigate to Accountant Tools → Fixed Assets from the sidebar
2. Click Add Asset
3. Enter the Asset Name (e.g., "2024 Ford Transit Van")
4. Select an Asset Category (see below)
5. Enter the Purchase Date and Purchase Cost
6. Set the Useful Life in years
7. Enter the Salvage Value -- the estimated value at the end of its useful life
8. Choose a Depreciation Method
9. Select the appropriate Asset Account and Depreciation Expense Account
10. Click Save Asset

Asset Categories

Asset categories help you organize fixed assets by type and apply consistent depreciation rules. Kantivo includes common categories by default:

You can create custom categories to match your business needs. Each category can have a default useful life and depreciation method to speed up data entry.

Generating Depreciation Schedules

Once an asset is saved, Kantivo automatically generates a full depreciation schedule showing the expense allocation for each period over the asset's useful life.

To view or generate a depreciation schedule:

1. Open the asset from the Fixed Assets list
2. Click View Schedule (or Generate Schedule if not yet created)
3. The schedule displays a table with one row per period, showing:
   • Period -- the month or year of the depreciation charge
   • Depreciation Expense -- the amount charged in that period
   • Accumulated Depreciation -- the running total of all depreciation to date
   • Net Book Value -- the remaining value of the asset after depreciation

The schedule updates automatically if you change the depreciation method, useful life, or salvage value.

Depreciation Methods Explained

Kantivo supports three depreciation methods. Each distributes the depreciable amount (cost minus salvage value) differently over the asset's useful life.

Straight-Line

The simplest and most commonly used method. The same amount is charged every period.

Formula:

Annual Depreciation = (Purchase Cost - Salvage Value) / Useful Life

Example: A $50,000 asset with a $5,000 salvage value and 5-year useful life:

($50,000 - $5,000) / 5 = $9,000 per year

Declining Balance

An accelerated method that charges more depreciation in the early years and less in later years. This is useful for assets that lose value quickly, like technology.

Formula:

Annual Depreciation = Net Book Value at Start of Year × (2 / Useful Life)

The rate is typically double the straight-line rate (known as "double-declining balance"). The asset is never depreciated below its salvage value.

Example: A $50,000 asset with a 5-year useful life (rate = 2/5 = 40%):

• Year 1: $50,000 × 40% = $20,000
• Year 2: $30,000 × 40% = $12,000
• Year 3: $18,000 × 40% = $7,200
• Year 4 and beyond: continues until salvage value is reached

Sum-of-Years-Digits

Another accelerated method that front-loads depreciation expense, but more smoothly than declining balance.

Formula:

Annual Depreciation = (Remaining Useful Life / Sum of Years) × (Cost - Salvage Value)

Where Sum of Years = n(n+1)/2 (for a 5-year life: 5+4+3+2+1 = 15)

Example: A $50,000 asset, $5,000 salvage, 5-year life (sum = 15):

• Year 1: (5/15) × $45,000 = $15,000
• Year 2: (4/15) × $45,000 = $12,000
• Year 3: (3/15) × $45,000 = $9,000
• Year 4: (2/15) × $45,000 = $6,000
• Year 5: (1/15) × $45,000 = $3,000

Posting Journal Entries

Kantivo can automatically create the journal entries for each depreciation period. This saves time and ensures your books stay accurate.

1. Open the asset and view its depreciation schedule
2. Click Post Entries to create journal entries for unposted periods
3. Kantivo creates a journal entry for each period that:
   • Debits the Depreciation Expense account
   • Credits the Accumulated Depreciation account (a contra-asset)
4. Posted entries appear in the transaction register and are included in financial reports

You can also post entries one period at a time if you prefer to review each one before it hits your books.

Example Journal Entry

Net Book Value

The net book value (NBV) of an asset is its original cost minus all accumulated depreciation to date. It represents the current carrying value of the asset on your balance sheet.

Formula: Net Book Value = Purchase Cost - Accumulated Depreciation

Kantivo displays the net book value for each asset in the Fixed Assets list and updates it automatically as depreciation entries are posted. The NBV decreases each period until it reaches the salvage value.

Keep in mind that net book value is an accounting figure, not market value. An asset's actual resale value may be higher or lower than its book value.

Disposing of Assets

When you sell, scrap, or retire a fixed asset, you need to remove it from your books. Kantivo handles the disposal journal entry for you.

1. Open the asset from the Fixed Assets list
2. Click Dispose Asset
3. Select the Disposal Type:
   • Sale -- the asset was sold for a known amount
   • Scrapped -- the asset was discarded with no proceeds
   • Retired -- the asset is no longer in use but was not sold
4. If sold, enter the Sale Price
5. Enter the Disposal Date
6. Click Record Disposal

Kantivo calculates any depreciation up to the disposal date, removes the asset cost and accumulated depreciation from the books, and records a gain or loss on disposal if the sale price differs from the net book value.

Gain or Loss on Disposal