Help with depreciation


I am trying to understand how depreciation can be setup based on this page:

Let’s say I buy a mobile phone for 300 Euro, its depreciation is calculated over 4 years(48 Months).
In Manager shall I :slight_smile:

  1. Click on Fixed assets and create a new asset name
    2)For the accumulated depreciation(this part I am not sure), if I purchased the phone on the 2/02/2019, 300 / 12 = 75 Euro(Yealy), shall I create 2 entries as:
    2/02/2020 @ 75 Euro
    2/02/2021 @ 75 Euro
    2/02/2022 @ 75 Euro
    2/02/2023 @ 75 Euro

If this is correct, where in my report will I see this depreciation so I can minus it to my Net profit?

The part I am not sure about is this…

As I have purchased the mobile phone, I have an expense of 300 Euro in my bank account + vat to calculate so I get it back from the vat department.

If I input the mobile as an asset, it is my understanding that I should not also create an expense receipt in my bank account(or shall I?), how does it works please?

Thank you so much.

OK I think I go it…

You need to first create the asset name and calculate manually its depreciation over 4 years(the same same but spread over 4 years in this particular item), then create an expense, select the item and select “asset depreciation” account.

In the profit and loss, you then see -75 yearly over the next 4 years instead of seeing the whole depreciated good price of 300.

No. As described in the Guide, depreciation is entered in the Fixed Assets tab by clicking on the blue accumulated depreciation balance, then the New Depreciation Entry button. It is not entered as an ordinary expense would be via a payment transaction. No account selection is involved. That is all automatic.

You should also check local regulations to see if a 300 Euro phone actually needs to be depreciated. It could well fall below the threshold.

Thank you for the reply.
Yes you have a point, I will check if 300 is not too low to be depreciated, will call the tax tomorrow.
One thing I do not understand is that let’s say you buy a computer at 1500 Euro, and want to register the V.A.T but also that this is an expense of electronic goods in Manager, how will just entering it as a depreciated item help? Also when you create an expense and choose the"fixed asset" account, the item(set in the depreciation windows) shows up there, if we cannot do that(create an expense as you said), why would the item shows there?

Thank you

You are mixing two completely different transactions. Things said about purchasing do not apply to depreciating. Buying the fixed asset is described here: When purchasing a fixed asset, VAT is accounted for immediately. Only the purchase cost of the asset itself is depreciated. It is the depreciation, period by period, that ends up as an expense (and a contra asset, offsetting the purchase cost of the asset to result in book value).

As an aside, you did not set up the fixed asset in any depreciation window. You created it under the Fixed Assets tab.

Yes you are right, I got mixed up(tired…been coding all day…)

Thanks again.

Not quite, depreciation is calculated based on your financial year end.
Lets say your year end is June 30, so in the first year your depreciation would be 5/48ths - Feb to Jun, then 12/48ths, 12/48ths 12/48ths and 7/48ths (the balance) in the last year.