Fixed asset impairments

When it turns out that a fixed asset is overvalued (e.g. while checking inventory) an impairment of a fixed asset is registered. The sum of the impairment is added to depreciation.

You can add a new impairment by selecting ‘More’ – ‘New impairment’ from the toolbar of the fixed asset chart.

new impairment

Filling the description field is optional but you have to enter a sum for the impairment and choose whether the useful life of the asset changes or stays the same.

impairment of fixed asset

After you press ‘Save’, an automatic general ledger entry is created using the ‘Fixed asset impairment and disposal account’ selected in fixed asset setting.

You can see the entry by selecting ‘More’ – ‘Open entry’ from the toolbar of the saved fixed asset operation.

The useful life of the asset

If you check the “Change depreciation rate to retain the useful life of the asset” option, a new depreciation rate is calculated automatically for the asset that achieves that goal.

If this box is unchecked the depreciation rate stays the same and the asset will depreciate faster.

You can see the asset’s different historical depreciation rates on the fixed asset chart.

SmartAccountsFixed asset impairments