Fixed Assets

A fixed asset is something you buy that's used to run the business and lasts more than a year — vehicles, computers, machinery, office furniture, buildings. Because the asset benefits multiple years, you don't expense the whole purchase at once; you depreciate it across its useful life, recording a small expense each period.

Solid Accounting tracks each fixed asset as a separate record with its own depreciation schedule, posts the periodic depreciation entries to the GL, and handles disposal when the asset leaves the business.

The accounting model

Fixed assets touch three accounts:

The asset's book value at any point is Asset − Accumulated Depreciation. As you record depreciation, Accumulated Depreciation grows and the book value falls toward the salvage value (or zero, if there's no salvage).

The standard pattern is one Asset and one Accumulated Depreciation sub-account per asset class — Vehicles, Computer Equipment, Office Furniture, Buildings — not one per individual asset. Solid stores the per-asset detail in the fixed_assets table while the GL aggregates by account, so the books stay clean and you keep the per-asset audit trail.

Recording a purchase

When you buy a fixed asset, the journal entry credits the bank or AP and debits the fixed-asset account:

Bought a 2026 truck for $48,000, paid by check
DR  Vehicles                            48,000
CR  Bank                                48,000

After posting, register the asset in Fixed Assets → New Asset with:

• Name + description — what it is
• Purchase date — when you bought it (drives the start of depreciation)
• Purchase price — what you paid
• Salvage value — what you expect to recover at end of life (often $0; sometimes 10–20% of cost for vehicles)
• Useful life in months — IRS Publication 946 has tables; for most small-business assets, 36 to 84 months
• Depreciation method — see below
• Asset account / depreciation expense account / accumulated depreciation account — where the periodic entries post

The asset record stays linked to the original purchase journal entry so you can drill from the asset back to the purchase.

Depreciation methods

Solid supports three methods. Pick once per asset; switching methods after the fact requires reversing prior depreciation and starting over.

Straight-line

The simplest and most common. Cost minus salvage, divided evenly across useful life.

$48,000 truck − $4,800 salvage = $43,200 to depreciate
60-month useful life = $720/month

Every month posts the same:

DR  Depreciation Expense — Vehicles       720
CR  Accumulated Depreciation — Vehicles   720

The last period absorbs any rounding remainder so the book value at the end equals salvage exactly.

Declining-balance

A larger expense in early periods, smaller in later periods. Useful for assets that lose value faster up front (cars, technology).

You specify an annual rate (in basis points — 2000 = 20%). Each period's depreciation is the current book value times the period's portion of the annual rate.

$10,000 asset, $0 salvage, 60 months, 30% annual rate
Year 1: starts at $10,000, depreciates $3,000 → ends at $7,000
Year 2: starts at $7,000, depreciates $2,100 → ends at $4,900
...

The schedule stops depreciating once book value reaches salvage; the last period forces book value to salvage exactly.

A common variant — double-declining balance — is just declining-balance with a rate equal to twice the straight-line rate. For a 60-month asset, that's 2 × (12/60) = 40% annual.

Sum-of-years-digits

An accelerated method between straight-line and declining-balance. Each period's expense is (remaining useful periods) ÷ (sum of all periods) × depreciable base.

Less common in modern small-business accounting; included for asset classes where it's required by industry practice or accountant preference.

What about MACRS?

MACRS (Modified Accelerated Cost Recovery System) is the tax-depreciation method the IRS requires on most US business assets. Solid doesn't run MACRS schedules natively — that's a tax-prep concern, and tax-depreciation often differs from book-depreciation deliberately. The pattern most accountants use:

1. Run book depreciation in Solid using straight-line or declining-balance — what shows up on your P&L and Balance Sheet
2. Run tax depreciation (MACRS) in your tax-prep software — what shows up on Schedule C / Form 4562
3. The difference between book and tax depreciation is a deferred tax timing item, tracked outside the day-to-day books

If your accountant wants book and tax depreciation to match, declining-balance with the appropriate rate often comes close to MACRS for many asset classes — but the tax software is still the authority for the IRS-filed numbers.

Recording depreciation

Depreciation entries post automatically based on the schedule. Solid's depreciation runner:

1. Lists every active asset and the periods that need posting
2. Computes the amount per the asset's method and schedule
3. Posts a journal entry of transaction_type = 'depreciation' for each — DR Depreciation Expense / CR Accumulated Depreciation

You typically run the depreciation runner monthly (or per fiscal period). The schedule is computed up front when you register the asset, so re-running mid-period is idempotent — periods already posted aren't re-posted.

The depreciation table (fixed_asset_depreciation) stores every period's planned amount and which journal entry actually posted it. You can audit the schedule, see what's planned for future periods, and reconcile against the GL.

Disposal

Selling, scrapping, or otherwise removing a fixed asset is a disposal. The journal entry has multiple sides:

Sold the truck (book value $32,000) for $30,000 cash, taking a $2,000 loss
DR  Bank                                30,000
DR  Accumulated Depreciation — Vehicles 16,000   (clear the truck's accumulated dep)
DR  Loss on Disposal                     2,000
CR  Vehicles                            48,000   (clear the original cost)

The asset's status moves to disposed and disposal_date + disposal_amount + disposal_je_id get recorded — you keep the historical record of every asset ever owned, even after it's gone.

If you sell for more than book value, the offset is Gain on Disposal (Other Income). If you scrap it for nothing, the offset is Loss on Disposal equal to the entire book value.

Reports

Two main reports specific to fixed assets:

• Asset Register — every asset, current book value, depreciation method, status. The single page that says "what fixed assets does the business own and what are they worth?"
• Depreciation Schedule — by-asset, by-period view of past and future depreciation. Useful for projecting next year's depreciation expense or for backing up a Section 179 election.

Both export to PDF and CSV.

Common gotchas

Asset is fully depreciated but still in use. Normal. The status moves to fully_depreciated once accumulated depreciation reaches the depreciable base. The asset stays on the Balance Sheet at its remaining book value (cost minus accumulated dep — equal to salvage if you set salvage; zero otherwise) until disposal.

The first month's depreciation looks wrong. Some methods take a half-month convention for partial first months (purchase mid-month → half a month's expense in month 1, half in the period beyond useful life). Check the schedule before posting; if your accountant uses full-month convention regardless, override the schedule's first period.

Disposal entry's accumulated dep doesn't match. The disposal entry has to clear exactly the accumulated depreciation that's been posted against this specific asset — not the total in the Accumulated Depreciation account (which covers all assets in that class). Solid's disposal helper computes the per-asset amount; double-check it against the asset's depreciation schedule.

Depreciation method change requires re-doing history. Solid won't change methods on an asset with posted depreciation entries — too many edge cases, too easy to silently corrupt the books. To switch: dispose the asset (effectively "sold" to itself for book value), register it as a new asset with the new method and remaining life, and post any one-time adjustment as a manual JE if needed. Your accountant should weigh in.

Useful life choice doesn't match what tax requires. Probably fine — book life and tax life don't have to match. Choose book life that reflects how long you think the asset will be useful. The tax-prep software handles MACRS lives separately.

Cross-references

• General Ledger → debits and credits for the contra-asset model that powers Accumulated Depreciation
• Reports → Balance Sheet for where fixed-asset book value shows
• Banking → Checks for the typical purchase-with-check pattern