In January 2021 I have purchased a vehicle and updated kept it in stock for further sale. After a couple of months, I decided to use it as a company car and I have registered it as fixed asset, effective 1st December 2021. I would like to dispose it with the end of May 2022.
I thought that the best way of calculating the depreciation is adding the 10% depreciation rate to the disposed item. What I miss is the starting date of the fixed asset.
in “Purchase fixed asset…” I have found the following statement:
If a start date has been set, Starting balance fields appear for Acquisition cost and Accumulated depreciation as of the start date.
From some reason I am not able to find the startind date of the fixed asset anywhere. It would make a difference, as the purchase invoice value (and the invoice itself) is linked to the fixed asset. The invoice date is January 2021, while the effective fixed asset date is 1st December 2021. Can we differentiate in Manager between the purchase date and the day when the product has been moved to fixed assets? If yes - where could I do that?
The starting date of any fixed asset deals with a payment against that asset. I would advise to dig a bit deeper in the guidelines https://www.manager.io/guides/9106 as just creating a fixed asset from the tab does not yet make it a fixed asset that you have, see the final note on the page (screenshot below).
That was incorrect. Depreciation is not added to anything (except the balance of accumulated depreciation). Depreciation is a way of recovering the expense of acquisition over time instead of all at once.
That sentence in the Guide requires updating, because start dates are no longer set in Manager. (They are not needed.) The starting balance referred to, which is entered when creating a fixed asset, applies only if you are transferring a fixed asset from a prior accounting system. That is how you transfer existing book value into Manager. That is not your situation. So you should not have any starting balances, either for acquisition cost or accumulated depreciation. I will initiate a change to correct the Guide.
Since you were converting an existing inventory item to a fixed asset, without payment of further funds, you should have used a journal entry. Debit Fixed assets, at cost > Fixed asset and credit Inventory on hand > Inventory item for the average cost of the item on the day of conversion. Do nothing about depreciation on or as of the conversion date, because inventory on hand is not depreciated. Then, depreciate the asset from the conversion to the disposal dates. The exact method for that depends on your chosen depreciation method.
