Changes to capital asset handling
We’re changing the way we handle capital assets in FreeAgent.
We've set up more logical nominal codes and created different accounts for additions, disposals, and depreciation during the year and on disposals.
If you look at the list of FreeAgent codes under Journal Entries or in Accounting > Trial Balance > Chart of Accounts CSV, you’ll see the following codes:
- 601 - Capital Asset Brought Forward
- 601-1 - Computer Equipment Brought Forward
- 601-2 - Fixtures and Fittings Brought Forward
- 601-3 - Motor Vehicles Brought Forward
- 601-4 - Other Capital Asset Brought Forward
- 602 - Capital Asset Purchase
- 602-1 - Computer Equipment Purchase
- 602-2 - Fixtures and Fittings Purchase
- 602-3 - Motor Vehicles Purchase
- 602-4 - Other Capital Asset Purchase
- 604 - Capital Asset Disposal
- 604-1 - Computer Equipment Disposal
- 604-2 - Fixtures and Fittings Disposal
- 604-3 - Motor Vehicles Disposal
- 604-4 - Other Capital Asset Disposal
- 605 - Capital Asset Depreciation
- 605-1 - Computer Equipment Depreciation Brought Forward
- 605-2 - Fixtures and Fittings Depreciation Brought Forward
- 605-3 - Motor Vehicles Depreciation Brought Forward
- 605-4 - Other Capital Asset Depreciation Brought Forward
- 606 - Capital Asset Depreciation
- 606-1 - Computer Equipment Depreciation In Year
- 606-2 - Fixtures and Fittings Depreciation In Year
- 606-3 - Motor Vehicles Depreciation In Year
- 606-4 - Other Capital Asset Depreciation In Year
- 607 - Depreciation on Disposal of Capital Asset
- 607-1 - Depreciation on Disposal of Computer Equipment
- 607-2 - Depreciation on Disposal of Fixtures and Fittings
- 607-3 - Depreciation on Disposal of Motor Vehicles
- 607-4 - Depreciation on Disposal of Other Capital Asset
So what does that mean for you?
If you don’t have any capital assets on your books, then you can stop reading this now.
If you do have capital assets, then you’ll see things working slightly differently.
We’ve changed the numbers of some codes as follows:
- 611 (Computer Equipment Additions) will become 602-1 (Computer Equipment Purchase)
- 613 (Fixtures & Fittings) will become 602-2 (Fixtures & Fittings Purchase)
- 615 (Motor Vehicles) will become 602-3 (Motor Vehicles Purchase)
- 612 (Computer Equipment Acc. Depreciation) will become 606-1 (Computer Equipment Depreciation In Year)
- 614 (Fixtures & Fittings Acc. Depreciation) will become 606-2 (Fixtures & Fittings Depreciation In Year)
- 616 (Motor Vehicles Acc. Depreciation) will become 606-3 (Motor Vehicles Depreciation In Year)
These codes will be discontinued, so If you have any figures in codes 611-616 you’ll see them in slightly different places when you next look at your Trial Balance. Other than this, the Balance Sheet will look exactly the same.
We’ve also worked some accounting magic so that anything you post to a code starting with 602 or 604 will be rolled up into its counterpart starting with 601 at the end of the financial year, so that at the start of the new financial year you’ll see last year’s cost brought forward, plus any additions, less any disposals, all in the one code. This is something you’d otherwise need to do yourself, or ask your accountant to do, when your final accounts are prepared.
Similarly, anything you post to the 606 or 607 codes will go automatically into its 605 counterpart at the end of the year. This is to do the same thing with the depreciation.
FreeAgent’s automatic depreciation entries will be posted into the codes that end in “Depreciation in Year”.
When you enter a purchase of a capital asset, you'll be asked how you'd like to categorise it - Computer Equipment, Fixtures and Fittings, Motor Vehicles, or Other. Make sure you choose the correct category so that your asset goes into the right line on the balance sheet.
- New Year, new plan: how automating tasks can make 2017 your most successful year yet
- Five things we’ve learned about the UK’s smallest businesses in 2016
- FreeAgent Mobile: don't sweat your business health
- Spreadsheets versus FreeAgent: an accountant’s point of view
- Autumn Statement 2016: contractors feel the impact