How fixed asset depreciation in Business Central is set up and run

Depreciation books: the base of fixed asset depreciation in Business Central

A depreciation book holds the rules and the running values for a set of assets. One asset can sit in several books at once. That is how a company keeps one set of figures for its financial statements and another for tax, each with its own method and useful life.

On the Depreciation Books page you decide whether each type of posting integrates with the general ledger. Types include acquisition, depreciation and disposal. The book for financial reporting normally has integration on. A tax book usually has it off, so its figures stay in the fixed asset subledger only.

Fixed asset depreciation methods in Business Central

You choose the method for each asset on its FA Depreciation Books line. Straight-Line spreads the cost evenly across the asset's life. Declining-Balance 1 and Declining-Balance 2 apply a rate to the remaining book value. The combined DB1/SL and DB2/SL options switch to straight-line when that gives the larger amount.

User-Defined lets you enter your own table of rates for each period, which is how tax schedules are usually modeled. With Manual, the system calculates nothing and you enter the amounts yourself. There is also a Half-Year Convention option for books that need half a period in the first and last fiscal year.

Set up an asset for fixed asset depreciation in Business Central

Open the Fixed Asset card and fill in the description, FA Class Code and FA Posting Group. The posting group decides which ledger accounts receive acquisition cost, accumulated depreciation and depreciation expense. So assets of the same kind share a group and land on the same accounts.

In the depreciation book lines, choose the book, the method and the Depreciation Starting Date. Then add either the ending date or the length of the asset's life. Next, post the acquisition cost through a purchase invoice or the Fixed Asset G/L Journal. An asset with no acquisition posted has nothing to depreciate.

Run fixed asset depreciation in Business Central each period

Search for Calculate Depreciation. Choose the depreciation book, then enter the date up to which depreciation should run, the posting date and a document number. Tick Insert Bal. Account so the expense side is filled in. You can filter to a class or a single asset for a trial run.

The job does not post. It creates lines in the Fixed Asset G/L Journal, one for each asset. You can inspect them and then post. Afterward, the FA Ledger Entries and the Book Value figure on each asset show the result. The Fixed Asset Book Value report gives the movement for the period.

Mistakes to avoid and when to ask for help

The most common mistake is a wrong starting date, which makes the first calculation catch up or skip periods. Another is running the job twice for the same date. A third is loading assets from an old system with accumulated depreciation that does not agree with the ledger. Each is fixable, but easier to prevent.

When you bring assets across from another system, post acquisition cost and accumulated depreciation as separate opening entries dated at the cutover. Then let Business Central calculate from there. If your books do not tie to the ledger, or you need a tax book added, our consultants can work through it with you remotely.

Questions about fixed asset depreciation in Business Central

Does Business Central calculate depreciation automatically?

It calculates the amounts when you run the Calculate Depreciation batch job, and it places them in a journal. You then post that journal. You can also schedule the job through the job queue, though most finance teams run it at month end. So the system does the sums, and your team keeps control of what posts.

Can one asset have different depreciation for book and tax?

Yes. Assign the asset to two depreciation books, each with its own method and life. Typically the financial book posts to the general ledger and the tax book does not. Then run the Calculate Depreciation job separately for each book. That way, fixed asset depreciation in Business Central serves both your accounts and your tax return.

How do I change the depreciation method on an existing asset?

Change the method or the dates on the asset's depreciation book line. Future calculations use the new settings and work from the current book value. But past entries are not rewritten. So if earlier periods were wrong, you need a correcting journal entry as well. Check the result on one asset before you change a whole class.

What happens to depreciation when an asset is sold?

Post the disposal through a sales invoice or the fixed asset journal. If you ask it to, Business Central calculates depreciation up to the disposal date. It then removes the cost and accumulated depreciation, and posts the gain or loss to the accounts on the posting group. Check the disposal date first, because it sets the last depreciation period.

Which license includes fixed assets?

Fixed assets, including depreciation books and the calculation job, are part of the Essentials license, so you do not need Premium for them. Check your own plan with your Microsoft partner, because license terms change. We can also go through your setup with you during US business hours, and tell you which features you already pay for.

Related fixed asset depreciation in Business Central pages

Fixed asset depreciation in Business Central is one part of the monthly close. These pages cover our fixed asset setup service, the close routine itself and the posting groups that decide where asset entries land in the ledger. Read them together, so your books, your journal and your reports always tie. For the product detail, see Microsoft's guide to depreciating or amortizing fixed assets.