Task guide

Fixed assets, depreciation and the year's tax

Keep a register of what the firm owns, charge its depreciation month by month, take an asset off when it leaves, and read the year's income tax computation and accounts from the same books.

The register

Everything the firm owns and uses for more than a year sits on the register under Ledger, Fixed assets: computers, furniture, vehicles, its building. Each asset has a number, a class, where it is and who keeps it, what it cost, the depreciation held against it and what it still carries in the books.

Choose Record an asset and say how it came into the books:

Bought on a supplier's bill: choose the posted bill line booked to property and equipment. The cost comes from the line and the books already hold it, so nothing more is posted.
Bought now, paid from an account: give the cost and the office account that paid it. One journal moves it from that account to property and equipment.
Already in the books: give the cost and the depreciation it already carries. Nothing is posted; use this for what the firm owned before it kept its books here.

An asset wears out on its class's terms unless you set its own: straight line over a number of months, or reducing balance at a rate a year, down to what it should be worth at the end. The terms stay fixed once a month has been charged.

The fixed asset register: each asset at its cost and what it still carries. — The register: each asset, its class, what it cost and what it still carries.

An asset's page: its cost, the depreciation held and each month charged. — An asset's page: what the books hold against it and each month charged.

Depreciation, month by month

Under Fixed assets, Depreciation, choose Run the next month. The page shows what each asset in use is charged for the month and what it carries after, before anything is posted. Post the month posts one journal on the month's last day: depreciation expense against accumulated depreciation.

Months run once each and in order, and only into an open accounting month. An asset bought in a month is charged in full for that month; it is not charged in the month it leaves. A month posted in error can be reversed from its row, latest first, and run again.

The next month's depreciation, read asset by asset before it is posted. — The next month read asset by asset before anything is posted.

Each month's depreciation run, with its journal and standing. — Each month's run with its journal; the latest can be reversed.

When an asset leaves

From the asset's page choose Take off the register. Say whether it was sold or given away, or lost, stolen or broken beyond repair, the day it left, what it fetched and where that money went, and why. Every month before the one it left in must be charged first. One journal takes its cost and depreciation out of the books, brings in what it fetched, and posts the gain or the loss.

The year's tax

Ledger, Tax reads the year's income tax computation from the books as they stand:

The books' profit for the year.
Depreciation and any loss on disposal put back; any gain on disposal taken off.
The expenses the law does not allow added back.
The capital allowances taken off, and any balancing charge added.
The chargeable income, then the tax by how the firm is taxed: a company at the company rate, a sole practitioner by the graduated bands, a partnership through each partner's share.

What may make the figures wrong reads first, such as a month whose depreciation is not posted yet. For a partnership, Set the shares records each partner's share of the year's profit as the partnership agreement does.

The capital allowances table shows each class of the tax law: the written-down value at the start, what was bought and sold, the allowance, any balancing charge, and the value at the end.

The year's income tax computation, from the books' profit to each partner's tax. — From the books' profit to chargeable income and the tax, with each partner's share.

The year's accounts

Ledger, Year end, Year's accounts shows the statement of changes in equity, one column for each equity account, and the notes: property and equipment, what is owed to and by the firm, taxes, money held for clients, and the accounting policies. The accounts as PDF prints them with the statements on the letterhead; opening it is recorded.

The year's changes in equity and the notes to the accounts. — The changes in equity and the notes, from the same books.

What the firm sets

Settings, Accounting, Fixed asset classes: each class's method, months or rate, what is left at the end, and its capital allowance class.
Settings, Accounting, Tax, Capital allowances: the classes of the tax law with their rates. They ship from the Income Tax Act, 2015 (Act 896), Third Schedule, marked for the firm's own adviser to confirm. A class with assets from before the firm's first year here can be given its opening written-down value.
Settings, Accounting, Tax, Income tax: the graduated bands from the year each set applies, and the expense accounts the computation adds back with the reason.
How the firm is taxed, the company rate and the accounting policies are under Settings, General.

The firm's asset classes, each with how it wears out and its tax class. — The firm's asset classes.

The capital allowance classes of the tax law, each with its rate. — The tax law's capital allowance classes, marked for the firm's adviser.

The graduated bands and the expenses the computation adds back. — The graduated bands and the disallowed expenses.

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