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As a fixed asset is in use, its value will decline through its useful life. Depreciation is the process of allocating an asset's cost over the course of its useful life. Notice that generally most of tangible assets are depreciated except for land which is never depreciated. Some of the intangible assets are not depreciated because they may have unlimited useful life with their value not declining over time.
FirstBIT FirstBit ERP provides the functionality that allows you to account for the fixed assets from their purchase to disposal.
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The sale transaction generates the following journal entries:
GL Account | Debit | Credit |
Accumulated Depreciation | 2400 | |
Initial Cost | 4000 | |
Receivables | 3000 | |
Gain/Loss | (3000-1600) = 1400 |
Writing off the fixed assets
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The write off document generates the following journal entries:
GL Account | Debit | Credit |
Accumulated Depreciation | 4200 | |
Initial Cost | 4800 | |
Expense | 600 |
Viewing the documents related to a fixed asset
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