Once you have calculated the depreciation on fixed assets, you need to record the transactions.

There are no prescribed source documents, but many businesses use an asset register. In this asset register some information such as the date when the fixed asset is acquired, the method to calculate the depreciation, the percentages or formulae, etc. is recorded.

The Income Tax Act and the Companies Act, or any other Legislation, applicable to your business, may also prescribe the specific information, which is required.

These transactions are normally recorded in the General Journal on an annual basis, before you close the financial year.

- Some businesses do these transactions on a periodic basis, six monthly or monthly. If you have many different fixed assets and depreciation transactions, you may create a separate depreciation journal or batch. You may also create a repeating entries batch in the Edit→Repeating Transactions menu option.

To Enter Depreciation Transactions:

1. Click on the Batch Entry icon, or click on the Input→Batch Entry menu option.
   - Keyboard Access: Press the F2 key on your keyboard. Alternatively, press the Alt+I+B keys on your keyboard.
   The Batch Type Selection screen will be displayed.
2. Select the Depreciation Journal.
3. Click on the Open button. The Batch Entry Transaction screen for the Depreciation Journal is displayed:
   
   - You may enter the Depreciation transactions in the General Journal. If the Depreciation Journal is not available, you may exit the Batch Entry facility and create a Depreciation Journal in the Setup→System Parameters→Batch Type menu option.
   
   - If no contra account is displayed on the Batch Type Selection screen, you need to set up the options for the batch. If you have not yet set the Depreciation Journal, or General Journal, for depreciation transactions, or if your requirements should change, click on the F10: Setup icon, or press the F10 key on your keyboard.
   
   - Note that for Depreciation, the Amount Entry field should be set to credit.
   
   
4. Enter and / or select the following:
   1. Reference number - Enter the Reference number you allocate to the Depreciation transaction.
   2. Date - Enter or select the date for the transaction.
   3. Description - Enter a brief description for the transaction.
   4. Account - Select the applicable account to which you need to allocate the debit or credit transaction.
   5. Tax Account - Select the No Tax code.
      - Since no Tax is applicable to the Depreciation transactions, you may select to hide the tax column, Exclusive and Inclusive icons, as well as the lookup facility in the Setup Options for the Depreciation Journal, or General Journal, as in this example.
      
      
   6. Amount - Enter the amount of the transaction in the credit column.
5. After entering the transactions in the Depreciation Journal, the transactions will be displayed as follows:
   
   
6. Click on the F5: Balance icon, or press the F5 key on your keyboard, to balance the batch:
   
   
7. Click on the F9: Process icon, or press the F9 key on your keyboard, to change the alias (batch name).
   - This will help you if you wish to identify a specific batch to generate a batch type report, or if you wish to export posted batches to a file.
   
   
8. Click on the F8: List icon, or press the F8 key on your keyboard, to list the batch.
   - It is a good idea to list the batch, and check the entries on the batch thoroughly. If there are any errors, you may edit the batch, before posting the batch.
   
   
9. Click on the F6: Post icon, or press the F6 key on your keyboard, to post (update) the batch to the ledger.

After posting the transactions, the T-Account View of the transactions should reflect as follows:

1. Asset Accounts (Accumulated Depreciation):
   
   
   
2. Expense Account:
   
   

The amount for the depreciation is debited to the Depreciation expense account.

- This will reduce your net profit.
The amount for the depreciation is credited to the respective Accumulative Depreciation - Fixed Asset accounts.

- This will reduce the balance of the Fixed Asset Accounts to display the book value for each Fixed Asset. This is a contra account to the Fixed Assets Financial Category.

- Debits - Expenses (Depreciation) = Credits - Provision for Depreciation (Contra Accounts for the Fixed Asset Accounts)