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How to Depreciate Fixed Assets


How to Depreciate Fixed Assets

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If your business relies on fixed assets, such as office space, machinery, IT equipment, and other tools, you will need to know how to depreciate your assets. After all, no matter what you do, the value of your assets decreases over time and usage.

What is Depreciation?

According to Investopedia, depreciation refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life or life expectancy. Depreciation represents how much of an asset's value has been used.

Depreciation Step-by-Step

Depreciating all the assets in your business is not always the best idea. Assets that are only temporarily in your business shouldn't be depreciated. Assets of lower value can also be avoided, although they should still be tracked using an asset management software.

Once you've decided on which of your assets that you would like to calculate depreciation for, you can perform the following steps:

  • Identify depreciation factors. There are several elements to consider when calculating depreciation. The most important is the expected useful life of the asset. Once it's past its useful life, you'll calculate a salvage/minimum value if applicable.
  • Take advantage of automatic depreciation. Free asset management software platforms such as BlueTally supports straight-line depreciation, by dividing the scrap/minimum value by the estimated asset life along with the original cost.
  • Keep all your depreciations in one place. Once you've successfully calculated your depreciation value, you need to store it somewhere. It doesn't make sense to keep it separate from your other asset information, so you should use a free and simple asset management tool like BlueTally for managing everything related to your assets.

Pick the right tool for the job

We've built BlueTally to help all kinds of companies and organizations manage the depreciation of their most important assets - both physical and digital. Learn more about BlueTally and get started for free with our simple asset management system.

BlueTally - Simple and Free Asset Management Software

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