Assets
Some things your business buys get used up quickly — printer paper, packing tape, a month of electricity. Other things you buy once and use for years: a machine, a delivery van, a set of laptops, the air conditioners in your office. Assets is where you keep a list of those long-lived things — what each one cost, where it is, who is using it — and track how its value falls year after year until the day you sell it or scrap it.
That list is called your asset register. It's the record an auditor asks to see, the place your accountant works out the yearly wear-and-tear figure from, and a simple way for you to know exactly what your business owns and what it's worth today.
Availability depends on your plan and your role.
An asset is not the same as an expense
The difference decides where a purchase lands in your books, so it's worth getting right.
| A normal expense | A fixed asset |
|---|---|
| Used up in the short term | Used for several years |
| Counts against this year's profit in full | Its cost is spread across the years it's used |
| Stationery, fuel, rent, repairs | Machinery, vehicles, computers, furniture, equipment |
| Nothing left to track afterwards | Stays on your register until you dispose of it |
When you record a long-lived thing as an asset instead of a plain expense, that's called capitalising it. Instead of the full cost hitting this year's profit, the cost sits on your register and is charged off a little at a time over the years you actually use it. That yearly charge is called depreciation.
What the register tracks
For each asset you can keep:
- What it is — a name, a category ("Plant & Machinery", "Vehicles", "Office Equipment"), the maker, the model and the serial number
- What it cost and when you bought it
- Where it is — the location, and which team member is responsible for it
- Its warranty — so you know when cover runs out
- Its current state — in use, idle, under maintenance, retired, or disposed of
- Its value today — its original cost minus all the wear-and-tear charged so far
How value falls over time (depreciation, in plain terms)
A five-year-old van is worth less than a brand-new one. Depreciation is simply the accounting version of that: each year, a slice of the asset's cost is charged as a running-cost of the business, and the asset's value on your books — its book value — drops by the same slice.
There are two common ways to work out the yearly slice:
| Method | How the slice is worked out | Feels like |
|---|---|---|
| Equal slices | The same amount every year, across the asset's expected life | Steady and predictable |
| Reducing slices | A fixed percentage of whatever value is left — so a bigger drop early on, smaller drops later | Faster in the early years |
Two things every method respects:
- A floor it never drops below. You set a small leftover value the asset is worth at the very end (its scrap or resale value). Depreciation stops there — it never writes the asset down to nothing.
- A start date. Depreciation begins when the asset is first ready to use, which may be later than the day you bought it — a machine bought in March but installed in June starts depreciating in June.
You don't calculate any of this by hand. You tell Bizconnekt the method, the expected life and the leftover value once; from then on it works out each period's charge for you and keeps the running total up to date.
Some businesses also track a separate wear-and-tear figure for their tax return, which follows different rules from the one in their main accounts. Bizconnekt can hold both — ask your accountant which applies to you.
The typical life of an asset
- Buy it — usually on a supplier bill, like any other purchase
- Capitalise it — add it to the register instead of expensing it, and set how it should depreciate
- Use it — year after year, its book value falls as depreciation is charged
- Dispose of it — sell it, scrap it or write it off at the end, and your books record the gain or loss
A real example
You buy a packaging machine on a supplier's bill. Instead of the whole price hitting this year's profit, you capitalise it — it goes onto your register at its purchase price. You tell Bizconnekt it has a five-year life and a small resale value at the end.
Each year, Bizconnekt charges a slice of the cost as depreciation, and the machine's book value falls step by step. After five years the machine is nearly written down to its leftover value. You find a buyer, sell it, and record the sale. Bizconnekt compares what the buyer paid against the machine's remaining book value and shows whether you made a small gain or a small loss — and takes it off your register.
Getting started
| Task | Guide |
|---|---|
| Add an asset to your register (often from a bill) | Add an Asset |
| Manage assets, depreciation and disposal | Manage Assets |
Related guides
- Add an Asset — capitalise a new asset and set how it depreciates
- Manage Assets — view the register, track depreciation, and record a disposal
- Bills — an asset usually starts as a supplier bill
- Purchase Order — order the equipment before the bill arrives
- Manual Journal — where depreciation and disposal entries land in your books
Need help? Contact support at support@bizconnekt.com