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Solution ID:
250408090546223
Last Modified Date:
Thu Jan 15 09:18:14 UTC 2026
Taxonomy Path:
Case category//How do I...//processing
Author:
[email protected]
How to post asset depreciation manually
Description

Business assets, like office equipment and vehicles, lose value over time through depreciation. You can regularly record transactions to record the depreciation on your Profit and Loss report.

There are various reasons to calculate and post your depreciation manually. For example, you don't use the Fixed Assets Register, you post depreciation annually or you use a different depreciation method. If you're not sure which method to use, check with your accountant.

 NOTE: You can post depreciation automatically when you run your month end process in Sage 50 Accounts Professional. If you're interested in upgrading your software, leave your details and we'll be in touch. 

Cause
Resolution

Before you start

  • Record the purchase of an asset before you post depreciation

This is the same process as recording other purchases. Post a supplier invoice or a bank payment to your fixed asset nominal code. 

▼ Create the depreciation nominal codes

The default depreciation nominal codes are as follows. If you already have these nominal codes, follow the post the depreciation journals section.

TIP: Check the Sage 50 Accounts default codes in Nominal codes.

Nominal Code Nominal name Report Report section
0021 Plant/Machinery Depreciation Balance Sheet Fixed Assets
0031 Office Equipment Depreciation Balance Sheet Fixed Assets
0041 Furniture/Fixture Depreciation Balance Sheet Fixed Assets
0051 Motor Vehicles Depreciation Balance Sheet Fixed Assets
8001 Plant/Machinery Depreciation Profit and Loss Overheads
8002 Furniture/Fitting Depreciation Profit and Loss Overheads
8003 Vehicle Depreciation Profit and Loss Overheads
8004 Office Equipment Depreciation Profit and Loss Overheads
  1. Go to Nominal codes then select New.
  2. Complete the following information:

    N/C Enter the nominal code number that you want to create, for example, 8005.
    Name Enter the name of the account, for example, Plant/Machinery Depreciation.
  3. Click Save.
  4. If required, to create further nominal codes repeat steps 1 to 3.
  5. Click Close.

You've now created the new nominal codes. Check your chart of accounts to ensure the new nominal codes are in the correct Profit & Loss and Balance Sheet sections.

▼ Example of manual depreciation calculation

 TIP: The current value of an asset is the book value. 

  1. Calculate the annual depreciation rate as a decimal. For example: 25% / 100 = 0.25
  2. Subtract from 1:

For example: 1 - 0.25 = 0.75

  1. Calculate the monthly amount:

For example: 0.75 to the power of 1/12 = 0.976311575

Calculate this on a scientific calculator:

  • Enter 0.75, press xy, enter (1 / 12), then press =
  1. Find the monthly depreciation rate:

For example: 1 - 0.976311575 = 0.023688425

  1. Calculate Month 1 depreciation:

Current Value of Asset x 0.023688425 = depreciation

For example: £/€10,000 x  0.023688425 = £/€236.88

  1. Calculate subsequent months:

Subtract previous depreciation from value remaining, then multiply by 0.023688425
For example: £/€9,763.12 × 0.023688425 = £/€231.27

NOTE: The monthly rate (0.023688425) stays the same. Only the remaining value of the asset changes each month.

  Year 1
Month
Book Value
Monthly Depreciation
1
 9763.12 236.88
2
 9531.84 231.27
3
 9306.05 225.79
4
 9085.60 220.45
5
 8870.38 215.22
6
 8660.25 210.13
7
 8455.11 205.15
8
 8254.82 200.29
9
 8059.27 195.54
10
 7868.36 190.91
11
 7681.97 186.39
12
 7500.00 181.97
Annual Total: - 2500.00
▼ Post the depreciation journals
  1. Go to Nominal codes then select Journal entry.
  2. Enter a reference and date for your depreciation posting.
  3. Enter the relevant details for your journal entry.

    For example, to post £/€50.00 for motor vehicle depreciation, enter the following information:

    N/C Name Details T/C Debit Credit
    8003 Vehicle Depreciation (Profit & Loss) Depreciation charge T9 50.00  
    0051 Motor Vehicles Depreciation (Balance Sheet) Depreciation charge T9   50.00
  4. Click Save then Close.
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