At year end, the accountant asks for the fixed asset schedule, and the file turns out to be three lists in three places. The purchase invoices are in one folder, the laptops are on someone's inventory sheet, and a van that was sold in March still sits in the depreciation calculation. Nobody can say what the company's equipment is worth on paper, or even where half of it is.
A fixed asset register is the record that prevents this. It lists everything the business owns and uses for more than a year, with the cost, the depreciation charged so far and what each asset is worth in the books today. This guide explains what the register must include, how the three standard depreciation methods work with a worked example, how to handle disposals, and what the year-end roll-forward looks like.
What counts as a fixed asset
A fixed asset (also called property, plant and equipment) is something the business buys to use over several years rather than to sell. Typical examples:
- Vehicles, machinery and tools
- Computers, servers and office equipment
- Furniture and fittings
- Buildings and leasehold improvements
- Land
Most companies set a capitalization threshold, a minimum cost below which a purchase is expensed immediately instead of added to the register. A 20 dollar stapler is an expense. A 2,000 dollar laptop is usually an asset. Your threshold is a policy decision, so set it with your accountant and apply it consistently.
What a fixed asset register should include
A register that only lists names and prices is not enough. A useful one records, for every asset:
- Identification: a unique asset ID, description, category, and serial or tag number
- Where and who: location and the person responsible (custodian)
- Source: supplier and invoice reference
- Dates: purchase date and the date it went into service
- Cost: the purchase price plus costs to get it ready for use, such as delivery and installation
- Depreciation settings: method, useful life and residual value
- Results: depreciation for the period, accumulated depreciation and net book value
- Status: in use, fully depreciated or disposed
The location and custodian columns look like extras, but they are what make a physical count possible. A register that cannot be matched to the items in your office is a list of numbers, not a control.
Depreciation in one paragraph
Depreciation spreads the cost of an asset over the years it is expected to be useful, instead of charging all of it in the year of purchase. Each year's charge is an expense. The running total is accumulated depreciation, and cost minus accumulated depreciation is the net book value (NBV). The asset can be depreciated down to its residual value, the amount you expect to recover at the end of its life. Useful life and residual value are estimates, and they should reflect how you actually use the asset.
A worked example: one machine, three methods
Take a piece of equipment that costs 12,000, with a residual value of 1,200 and a useful life of 5 years. The depreciable amount is 12,000 − 1,200 = 10,800.
Straight-line
The same charge every year:
=SLN(cost, residual, life) which is =SLN(12000, 1200, 5) and returns 2,160
That is 180 a month. Net book value falls by 2,160 each year until it reaches 1,200. Straight-line is the most common method because it is simple and easy to audit.
Declining balance
A fixed rate applied to the opening book value each year, so the charge is highest in the first year. Double declining balance uses a rate of 2 divided by the life, here 40 percent:
=DDB(cost, residual, life, period, factor)
| Year | Opening book value | Charge | Closing book value |
|---|---|---|---|
| 1 | 12,000.00 | 4,800.00 | 7,200.00 |
| 2 | 7,200.00 | 2,880.00 | 4,320.00 |
| 3 | 4,320.00 | 1,728.00 | 2,592.00 |
| 4 | 2,592.00 | 1,036.80 | 1,555.20 |
| 5 | 1,555.20 | 355.20 | 1,200.00 |
Year 5 is limited to 355.20, because the book value cannot fall below the residual value of 1,200. Excel's DDB function stops at the residual value. A refinement used in practice is to switch to straight-line in the year when straight-line over the remaining life gives a larger charge. Here the switch changes nothing, because the declining charge is larger than the straight-line charge in every year, and year 5 is capped by the residual value either way. Declining balance suits assets that lose value or usefulness faster early on, such as vehicles and technology.
Sum-of-years' digits (SYD)
A declining charge calculated from a fraction. For a 5-year life, the digits add up to 5 + 4 + 3 + 2 + 1 = 15, and year 1 takes 5/15 of the depreciable amount:
=SYD(cost, residual, life, period)
| Year | Fraction | Charge | Closing book value |
|---|---|---|---|
| 1 | 5/15 | 3,600 | 8,400 |
| 2 | 4/15 | 2,880 | 5,520 |
| 3 | 3/15 | 2,160 | 3,360 |
| 4 | 2/15 | 1,440 | 1,920 |
| 5 | 1/15 | 720 | 1,200 |
SYD sits between straight-line and double declining balance: faster than the first, gentler than the second.
All three methods end at the same residual value after 5 years, and the total depreciation is always 10,800. The method only decides how much of that lands in each year, which matters for reported profit.
Monthly depreciation and the month convention
Most real registers depreciate by month, because assets are bought throughout the year. Two details decide the numbers:
- In-service date. Depreciation starts when the asset is ready for use, not on the purchase date. Equipment delivered in October but installed in December starts in December.
- Month convention. Either a full month of depreciation in the month the asset goes into service, or the first charge starts the following month.
Example: the machine above goes into service on 1 March 2027, the year end is December, and you charge a full month in the month acquired. Straight-line monthly depreciation is 180.
- 2027: 10 months × 180 = 1,800
- 2028 to 2031: 12 months × 180 = 2,160 each year
- 2032: 2 months × 180 = 360
The total is 1,800 + 8,640 + 360 = 10,800, exactly the depreciable amount. If monthly, year-to-date and full-year figures come from different formulas, they will disagree by cents or more, so build the year as the sum of its months.
The monthly entry in the books is a debit to depreciation expense and a credit to accumulated depreciation, here 180 each month.
Assets that should not be depreciated
- Land: it does not wear out, so it is not depreciated.
- Assets under construction: depreciation starts once the asset is ready for use.
- Assets below your capitalization threshold: they never enter the register.
- Fully depreciated assets: they stay on the register at their residual value while still in use, but the charge stops.
Recording disposals
When an asset is sold, traded in, scrapped or written off, the register needs three things: the disposal date, the proceeds and any costs of disposal. Depreciation stops, the asset leaves the totals, and the difference between what you received and its net book value is a gain or loss.
Gain or loss = proceeds − costs of disposal − net book value at disposal
Example: the machine is sold after 24 months of straight-line depreciation. Accumulated depreciation is 24 × 180 = 4,320, so the net book value is 12,000 − 4,320 = 7,680.
- Sold for 9,000: gain of 9,000 − 7,680 = 1,320
- Sold for 7,000: loss of 7,000 − 7,680 = −680
- Scrapped for nothing: loss of 7,680
The depreciation must be up to date to the disposal date, or the gain or loss will be wrong. This is the most common error in hand-built registers.
The year-end fixed asset schedule
The note in the accounts is a roll-forward by category. It shows how cost and accumulated depreciation moved during the year:
| Cost | Accumulated depreciation | Net book value | |
|---|---|---|---|
| Opening | 100,000 | 40,000 | 60,000 |
| Additions | 20,000 | ||
| Disposals | −8,000 | −5,000 | |
| Depreciation charge | 14,000 | ||
| Closing | 112,000 | 49,000 | 63,000 |
The check is simple: closing equals opening plus additions minus disposals for cost, and opening plus charge minus disposals for accumulated depreciation. The closing net book value must also match the balance sheet and the sum of the register. If any of those three disagree, there is an error somewhere, and finding it early is the whole point of keeping the schedule.
Book depreciation vs tax depreciation
Everything above is book depreciation, used in financial statements. Tax authorities usually have their own rules, with set lives, rates and allowances that can differ a lot between countries and between asset types. Keep the two separate, take your tax figures from your own country's rules, and ask your accountant which methods and lives apply to you.
Mistakes that break asset registers
- No location or custodian. You cannot count what you cannot find.
- Depreciating from the purchase date instead of the in-service date.
- Forgetting disposals. Sold or scrapped assets keep depreciating and inflate the register.
- Depreciating land.
- A residual value that makes the asset negative. Never depreciate below the residual value.
- Different formulas for month, year-to-date and full year.
- No tie-out to the balance sheet. Compare the register total to the ledger every month.
- Changing useful life without a record. Note who changed it and why.
A fixed asset register with the depreciation built in
You can build this yourself with SLN, DDB and SYD, but connecting a register, monthly depreciation, disposals, a roll-forward and a journal without a mismatch takes a long time. The Fixed Asset Register & Depreciation Schedule is an Excel workbook built the way accountants keep one.
Record each asset once with its ID, category, location, custodian, supplier, invoice reference, serial number, dates and cost. The register shows the method and life, the monthly charge, depreciation for the year, accumulated depreciation, net book value, age and the month it becomes fully depreciated. Each category sets a default method, useful life and residual value, and any asset can override them. Straight-line, declining balance (with a factor you choose and a switch to straight-line) and sum-of-years' digits are built in, and land can be set to not depreciated.
Depreciation is calculated by month from the in-service date, with your choice of month convention, and the monthly, year-to-date and full-year figures always agree. Disposals record sales, trade-ins, scrapping and write-offs, and the gain or loss is worked out for you. The Fixed Asset Schedule gives the roll-forward by category with checks that tie back to the register and the monthly schedule, and the Depreciation Schedule includes the journal entry for the report month using your account codes. An Asset Card prints one asset's full-life schedule for audit or insurance files, and the Dashboard shows cost, net book value, a six-year forecast and assets by location. It covers 200 assets and 100 disposals, locks the formulas without a password and contains no macros.
If you only need part of it, these templates may be enough:
Common questions
What should a fixed asset register include?
At a minimum: an asset ID, description, category, location, custodian, purchase date, cost, depreciation method, useful life, residual value, accumulated depreciation and net book value. It should also record disposals.
What is the difference between straight-line and declining balance depreciation?
Straight-line charges the same amount every year. Declining balance applies a fixed rate to the opening book value, so the charge is higher in early years and falls over time. Both depreciate the asset to the same residual value over its life.
How do I calculate depreciation in Excel?
Use SLN(cost, residual, life) for straight-line, DDB(cost, residual, life, period, factor) for declining balance and SYD(cost, residual, life, period) for sum-of-years' digits. For monthly figures, divide the annual charge by 12 and count the months from the in-service date.
How is the gain or loss on disposal calculated?
Subtract the costs of disposal and the net book value at the disposal date from the proceeds. A positive result is a gain and a negative one is a loss. Depreciation must be brought up to the disposal date first.
Should I depreciate land?
No. Land is generally not depreciated because it does not wear out. Buildings on the land are depreciated separately.
Can I use it for tax depreciation?
It is designed for book depreciation. Tax depreciation rules and allowances differ by country, so confirm methods and lives with your accountant.
Does it work in Google Sheets?
The workbook is built for Microsoft Excel 2016 or later (desktop or Excel for the web). You can import it into Google Sheets, but sheet protection does not carry over, so the locked formulas are easier to overwrite there by accident.
A register that matches the books and the building is one of the quickest ways to make year end calmer. You can preview the Fixed Asset Register & Depreciation Schedule free; downloading it is included in the OpenWorksheet monthly plan, along with the rest of the library. All figures in this guide are examples. Accounting policies and tax rules differ, so agree your methods, lives and thresholds with your accountant.
