Ledgr/Documentation/Fixed assets

Fixed assets

The things you bought that last more than a year — the bakkie, the laptops, the shop fit. Ledgr keeps the register, charges depreciation every month, and works out the gain or loss when you sell one.

Why this is not just an expense

A R40 000 laptop put through as an expense makes one month look terrible and the next three years look better than they are. Capitalising it spreads the cost over the period you actually use it, which is both what IFRS for SMEs requires and what SARS expects to see on the ITR14. It also means the asset appears on your balance sheet, which matters the first time a bank or a landlord asks for one.

Asset classes and write-off periods

Pick a class when you capture the asset and Ledgr fills in the write-off period from SARS' Binding General Ruling 7 — the periods an SA business is actually allowed to claim, so a default schedule is one your accountant will recognise.

Scroll the table sideways to see every column.

Every figure is a default, not a rule. BGR7 itself is a default, and a particular asset may genuinely have a different useful life — so all of it is overridable per asset. One limit holds: software and other intangible assets whose useful life you cannot estimate reliably are written off over at most ten years (120 months, IFRS for SMEs 18.20). Say so on the asset and Ledgr refuses a longer life; a licence or contract term that fixes the life is entered as reliable.

Each class names the pair of accounts its cost and its accumulated depreciation land in, which is what lets the balance sheet show them netted against each other.

Bringing a register across

Moving from another package? Import your register under Settings → Data → Import data, choosing Fixed asset register. Your opening trial balance already holds these figures, so each asset opens at its carrying amount and nothing is posted. Depreciation carries on from the month after your take-on date, and no past month is charged again. Your take-on checks show the register against your asset accounts.

Capturing an asset

1. Reports → Fixed Asset Register → Add asset
2. Describe it and pick its class

   Serial numbers and locations are worth filling in. The register is what an insurance claim or an audit is answered from.

3. Cost and the date you brought it into use

   Depreciation runs from the date it was available for use, not the date on the invoice.

4. Residual value, if you expect one

   What you think it will still be worth at the end. Leave it at zero if you do not expect to recover anything — that is the normal case for computers.

5. Confirm the method and the life

   Both are pre-filled from the class. Change them if this asset is genuinely different. A part with a life of its own — a building's roof, a truck's trailer, a machine's motor — is captured as its own asset with its own share of the cost, so that each part is depreciated over its own life (IFRS for SMEs 17.16).

6. Say how it was paid for

   Choose Bank — paid for in cash and Ledgr takes the money out of that bank account's own book and leaves a line on its statement for the bank's debit to confirm, instead of crediting the pooled bank control where no reconciliation can see it. With one bank account it is used by itself; with several you choose which. Bought on a supplier bill instead? Choose that account: the bill is where the payment and the VAT belong. Bought on an instalment sale or a loan? Choose 2020 Instalment Sale Liabilities or 2010 Long-term Loans and type the VAT as below: the VAT on the cash value is due at delivery (VAT Act section 9(3)(c)), so you claim it in field 14 straight away, and the account owes the financier the cost plus that VAT.

7. The VAT on the price

   Type the cost without VAT and the supplier's VAT on top of it. A VAT vendor claims that VAT in field 14 of the VAT201 (VAT Act section 16(3)), with the supplier's tax invoice behind it: over R50 that means the supplier's VAT number, typed here or kept on the supplier. Where it cannot be claimed (you are not a VAT vendor, or there is no supplier VAT number) the VAT is part of what the asset cost, and Ledgr capitalises the asset at the price including it (IFRS for SMEs 17.10(a)).

The tax allowance

The depreciation above is the books' charge. SARS allows a different one, and each asset is claimed under one allowance, never two. Every asset starts on section 11(e) wear-and-tear, over SARS' write-off period for its class. Change the asset's tax allowance (on its edit form) when it qualifies for another:

• Section 12E(1) — a small business corporation's new manufacturing plant: the whole cost in the year it is brought into use. Section 12E(1A) — its other equipment, if it elects: 50%, 30%, 20% over three years.
• Section 12C — manufacturing plant: 40% in the first year and 20% in each of the next three if new or unused; 20% a year for five years if used. New plant used directly in research and development: 50%, 30%, 20% over three years.
• Section 12B — renewable energy: 100% in the first year for solar photovoltaic up to 1 MW, otherwise 50%, 30%, 20%. The enhanced renewable energy allowance of section 12BA — 125% in the first year for an asset brought into use from 1 March 2023 to 28 February 2025 — is not applied: Ledgr allows an asset no more than its cost. Elect section 12B on such an asset and add the extra 25% to the return by hand.
• Section 11(e) small item — an item that works on its own, is not part of a set and cost less than R7 000 may be written off in full in the year it is brought into use (SARS Interpretation Note 47, paragraph 4.3.5). The register offers it on any such item still on wear-and-tear; you decide whether the item stands alone, and elect it yourself. It is refused on an item of R7 000 or more.
• Section 13 — a building used in manufacture, or a new commercial building: 5% of cost a year. A building used in manufacture whose erection began before 1 January 1989 is allowed 2% a year: choose Section 13 — building begun before 1 January 1989.
• None — Ledgr claims nothing on the asset; its tax value stays at cost.

Section 12E is a small business corporation's allowance. The election is made per asset, but whether the company qualifies is answered per year on the SARS screen; for a year you answer that it does not, the income tax return refuses to be prepared until each asset on section 12E is moved to another allowance, and names them.

The sections 12B, 12C and 12E allowances are given in whole for the year of assessment the asset is brought into use, whatever month it was bought in. The choice moves no figure in the books; it changes the income tax return, the recoupment or scrapping allowance on a sale, and the deferred tax. An asset brought across from another system can carry the tax value SARS has for it (a Tax Value column in the register file, with an optional Tax Allowance column naming the allowance): the allowances then run from that value, not from a value Ledgr works out from the cost.

Deferred tax follows how each asset's value is expected to come back (IFRS for SMEs 29.29). Land is not depreciated, so it comes back only by being sold, and a difference on it is measured at the capital-gain rate. A building the business occupies is used up, so it is measured at the company rate. With no section 13 allowance chosen, nothing on it is deductible, and that difference dates from when the building was bought, so no deferred tax is recognised on it (IFRS for SMEs 29.14(b)). Choose the section 13 allowance and its tax value is measured instead.

Income tax allowances run from the date an asset was brought into use, which can be later than the day it was bought (section 11(e) allows wear and tear on an asset brought into use). Give that date when you add or edit the asset; left blank, the purchase date is used. The register shows each asset's tax value today beside its book value, and on a sold asset the recoupment (section 8(4)(a): the proceeds, up to cost, above the tax value) or the scrapping allowance (section 11(o): the tax value above the proceeds).

Whether a small purchase is capitalised at all is your company's policy (IFRS for SMEs sets no figure). State your capitalisation threshold in Fixed assets and Ledgr suggests, where a purchase is coded, that an item under it is expensed (for example to Computer & IT Expenses instead of Computer Equipment) and that one at or over it is capitalised. It only suggests; the register entry made from a purchase carries the same sentence in its notes.

The two methods

• Straight line — cost less residual, divided evenly over the months. The same charge every month. Right for most things.
• Reducing balance — a percentage a year of what the asset is still worth, so the charge is largest in the first year and tapers. This is the common commercial treatment for vehicles, which is why it is the default there: a bakkie really does lose most of its value early. Give the asset a rate if you have one; if you leave the rate blank, Ledgr uses double-declining balance — twice the straight-line rate for the life, so a four-year vehicle is charged 50% a year on its carrying amount: R400 000 is charged R200 000 over its first twelve months (R22 450.27 in the first month, a little less each month after it). The percentage is the yearly figure, worked out month by month, and in the last month of the useful life whatever is left is charged so the asset ends exactly on its residual value. Nothing is charged after the life ends.

The monthly depreciation run

Depreciation is charged monthly rather than once a year, so the profit and loss you look at in August carries August's depreciation instead of a surprise arriving in February.

Ledgr books it for you the day after each month ends, once, up to the month end. It never posts into a month you have closed or locked. An asset that is due on a locked month is skipped and named, with the month and what it holds, while every other asset is still charged; and Ledgr emails you, once for each locked month and even when it is an earlier one than the month just ended, saying which month to reopen. Reopen it and run depreciation again: nothing is charged twice. You can still charge depreciation from the fixed asset register, up to today: a month is charged once it has ended, so a date ahead of today is refused rather than booking a month that has not happened. You can switch the automatic run off in Settings → Tax & VAT → Month end.

The run posts one journal per period: depreciation expense debited, accumulated depreciation credited. When assets carry a cost centre, the expense is debited once for each cost centre, so a branch's profit and loss carries the depreciation of the assets tagged to it. It is safe to run twice and safe to run after a gap — each asset records the period it has been depreciated through, so a run after three months away produces exactly three months of charges, once. Nothing is lost by forgetting a month.

Revising a life

If it becomes clear an asset will last longer or shorter than you thought, change the remaining life. Ledgr applies the new life forward and does not rewrite the depreciation already charged — which is correct: a change in estimate is not an error, and restating closed periods would move numbers in books you have already reported.

When an asset loses value

If an asset is damaged or no longer worth its carrying amount, record an impairment from its row in the register, with the reason, and reverse it later if the value comes back (never above what it would be had it never been impaired). The annual financial statements keep it apart from depreciation: the property, plant and equipment note shows Impairment losses recognised and Impairment losses reversed on their own lines, so the depreciation charge is only depreciation and a reversal is never read as a disposal. The cash flow adds back depreciation and impairment under one name.

Selling or scrapping one

Record the disposal with its date and what you received. Ledgr removes the cost and the accumulated depreciation from the balance sheet, compares the proceeds against what was left, and posts the difference as a gain or loss on disposal. Scrapping is the same thing with proceeds of nil.

The asset stays in the register, marked as disposed. Deleting it would be deleting the history the disposal journal refers to.

A passenger car you added as one (Passenger car ticked when you bought it) had its VAT denied (VAT Act section 17(2)(c)), and Ledgr remembers that: when you sell it, no output tax is charged, without you saying so again (section 8(14)(a)). A motor vehicle recorded before 8 November 2026 does not carry this, so on its sale tick Input tax on this motor car was denied when it was bought for a passenger car whose VAT you did not claim.

What it feeds

• The balance sheet — cost less accumulated depreciation, by class.
• The income statement — the monthly depreciation charge.
• The fixed asset register itself, which is what an auditor asks for first.
• The ITR14 — see SARS returns. Ledgr's depreciation is the accounting charge; the wear-and-tear allowance SARS permits is worked out from the same register at year end.

Common problems