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DEPRECIATION
DEPRECIATION JOURNAL
  
This journal is used to record all your depreciation transactions for your fixed assets, which you employ in your business to generate income. 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, in which your business is registered, 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, 6 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 Entries menu option.

To Enter your Depreciation Transactions:
Click on the speed button or icon. You may also press the key on your keyboard. Alternatively you may press the and and keys on your keyboard. The Batch Type screen will be displayed.
Select the General Journal or Depreciation Journal from the list displaying the available Batch Types and click on the button. The Batch Entry screen for the General Journal or Depreciation Journal will be displayed.
If no contra account or if any other account, than the Depreciation (Expense Account) is displayed on the Batch Type selection screen, you need to set the options for the batch. If you have not yet set the General Journal or Depreciation Journal batch up, or if your requirements should change, click on the speed button or icon. Note that for Depreciation transactions, the Amount Entry field should be set to credit.
Enter the following depreciation transactions in the General Journal or Depreciation Journal:

 

        Assets Amount
1. Furniture and Fittings 350.00
2. Motor Vehicles 600.00

Enter the Reference number you allocate to the depreciation transaction (it may in some cases refer to your asset register, if you have an asset register), date, description, select the accumulated depreciation sub-account for the specific fixed assets.

Select the No Tax code for the depreciation transactions, since the depreciation is calculated on the cost price or outstanding balance (excluding VAT) of the fixed assets. Enter the amount for each depreciation transaction in the credit column.

After entering the transactions in the General Journal or Depreciation Journal, the transactions will be displayed as follows:

Minimise button - inactive. Restore button - click to display this screen to full size and click again to restore it to its original size. Title bar - double-click to display the screen in full size or to return to the normal size. Title bar. The name of the selected batch. Title bar. The Alias for the selected batch. Close button - Click to close or exit this screen. Click to delete a selected transaction. Click to insert a row or line above a selected transaction. Click to balance the batch, if the batch is not already in balance. Click to post or update the transactions to the ledger, if the batch is in balance. Click to enter transactions Inclusive or Exclusive of VAT. Click to list the entries or transactions entered into the batch. Click to access more processing options for the batch. Click to set the Options for this batch. Enter the reference number for the transaction. Enter or select the date of the transaction. Enter a description for the transaction. Select the Fixed Assets - Accumulative Depreciation accounts. Leave blank. Enter credit amounts for each of the Fixed Assets - Accumulative Depreciation accounts. Scroll bar - scroll to view more transactions entered in the batch.
Click on the speed button or icon or press the key on your keyboard to balance the batch.

Minimise button - inactive. Restore button - click to display this screen to full size and click again to restore it to its original size. Title bar - double-click to display the screen in full size or to return to the normal size. Title bar. The name of the selected batch. Title bar. The Alias for the selected batch. Close button - Click to close or exit this screen. Click to delete a selected transaction. Click to insert a row or line above a selected transaction. Click to balance the batch, if the batch is not already in balance. Click to post or update the transactions to the ledger, if the batch is in balance. Click to enter transactions Inclusive or Exclusive of VAT. Click to list the entries or transactions entered into the batch. Click to access more processing options for the batch. Click to set the Options for this batch. Enter the reference number for the transaction. Enter or select the date of the transaction. Enter a description for the transaction. Select the Fixed Assets - Accumulative Depreciation accounts. Leave blank. Enter credit amounts for each of the Fixed Assets - Accumulative Depreciation accounts. Scroll bar - scroll to view more transactions entered in the batch. TurboCASH will create balancing entries to debit the Depreciation Expense account.

TurboCASH will generate balancing entries to the sales account and the Input VAT account. If the Consolidate balancing option is selected in the Setup Options for this batch, the description for the balancing entries or transactions, will be displayed as "BALANCING ENTRY Depreciation Jnl" or "BALANCING ENTRY General Jnl". It is a good idea to overtype this description as it is not very meaningful to an outside auditor or accountant. If you overtype these it will definitely make it easier to trace and reconcile transactions.
  • Overtype the description with "Depreciation 2005/2006 Fin Year" in the description column.

  • Do not overtype the ******** as it will indicate that these are contra transactions.
Click on the speed button or icon or press the key on your keyboard to change the alias. This will help you if you wish to identify a specific batch, if you wish to generate a batch type report or if you wish to export posted batches to a file.
Click on the speed button or icon or press the 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.
Click on the speed button or icon or press the key on your keyboard to post the batch. TurboCASH will post the entries to debit the total depreciation to the depreciation expense account and credit the selected accumulated depreciation general ledger sub-accounts The posted transactions will be displayed as follows in the accounts:




If the Consolidate Balancing Entries option was not selected when the options for this batch was set, the individual depreciation transactions would have been listed or posted to the selected Depreciation Expense Account.

It is not necessary to post or update the transactions at the end of each day. You may add your transactions on a daily or weekly basis and at the end of a month, you may post the transactions. When you have entered a few transactions, you may close or exit the batch. The data will not be lost.

Before you wish to post the batch, please ensure that you have checked the transactions and that you have changed the alias, print a list of the entries in the batch.

In the final year in which depreciation is written off, a nominal value of R() 1 should be retained in the books, unless the asset has a book value or scrap value. The value of an asset should never be reflected as 0 (zero) in the financial statements of a business. The final value of an asset is shown at a nominal value of R() 1 in the balance sheet. Only when the asset is disposed of, the value of R() 1 will be cleared when the profit or loss with the sale of the fixed asset is calculated.