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How do I account for Depreciation in LedgerSMB?
Wed, 04/25/2007 - 12:24 — agittins
LedgerSMB does not have a built-in assett tracking / depreciation feature. Depreciation can be managed manually using General Ledger Transactions. You should probably confirm this with your accountant, but the basic procedure (kindly suggested by Tony Fraser) is, assuming a computer asset over 5 years:
Set up 3 accounts:
- An asset account such as "Computers"
- An asset account such as "Accumulated Amortization, Computers" that is normally a negative balance therefor it is a contra account
- An expense account such as "Computer Depreciation"
Upon purchasing a depreciable asset (in this case, a computer):
| Account | Debit | Credit | Notes |
|---|---|---|---|
| On purchasing the computer | |||
| Computers | 1000.00 | ||
| Bank Account | 1000.00 | ||
| End of Year 1 | |||
| Computer Depreciation | 400.00 | (40% of $1000) | |
| Accumulated Amortization, Computers | 400.00 | ||
| End of Year 2 | |||
| Computer Depreciation | 240.00 | (40% of $600) | |
| Accumulated Amortization, Computers | 240.00 | ||
| End of Year 3 | |||
| Computer Depreciation | 144.00 | (40% of $360) | |
| Accumulated Amortization, Computers | 144.00 | ||
| Disposal | |||
| Bank Account | 75.00 | (sale of computer) | |
| Accumulated Amortization, Computers | 784.00 | (reversing entry) | |
| Computer Depreciation | 141.00 | (residual value) | |
| Computers | 1000.00 | (reversing entry) | |