Depreciation question on Sage accounts

  VNAM75 15:50 24 Dec 2008

I'm looking at the chart of accounts in sage line 50 and under fixed assets, it is listing office equipment and vehicles which is correct, but it also has a nominal code for depreciation for these categories too. But if its under fixed assets it comes under the balance sheet - should they be profit and loss items?

In overheads there is a section for depreciation which splits these 2 categories. So its being posted twice. Does anyone know if the setup is wrong?

  hsadiq1 11:47 07 Jan 2009

When an Asset is Depreciated, the entry is

Dr. Depreciation Expense XX
Cr. Accumulated Depreciation XX

Dep. Expense will appear on the P&L Statement (under direct expenses or overhead based on how you designate it)

Acc. Depreciation is a contra asset and will reduce the value of the fixed asset (Net effect on the Balance sheet)

I hope this answers your question.

  VNAM75 18:44 11 Jan 2009

Thanks hsadiq1, I've only just read your reply. Contra means to offset doesn't it? Like a supplier can also be a customer.

  wrg 16:26 12 Jan 2009

Contra is not really the word. Depreciation is to write off the value of the Fixed Asset over its useful economic life as determined by yourself (less any residual value). Each Fixed Asset will have 2 of its own depreciation accounts. One in the P&L & one in the Balance Sheet as hsadiq1.

  VNAM75 18:46 12 Jan 2009

I understand it now, thanks both

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