Recording Assets in Xero: A Simple Guide

Recording assets accurately in accounting software is critical, yet often overlooked.

By leveraging Xero's robust features for tracking assets, you can gain better visibility into your valuable resources and make data-driven decisions.

In this comprehensive guide, you'll learn step-by-step how to record both fixed and draft assets in Xero, configure optimal asset settings, categorize assets, track depreciation, manage disposals, utilize reporting tools, and more.

Introduction to Recording Assets in Xero

Recording assets in Xero provides businesses with an overview of their valuable resources for improved financial tracking and oversight. By leveraging Xero's customizable fixed asset settings and integration capabilities, companies can:

Understanding the Importance of Recording Assets in Xero

• Assets like equipment and property represent investments that enable business operations and revenue generation. Tracking them in Xero allows you to:
  • Record purchase and disposal transactions
  • Track depreciation expenses over time
  • Optimize taxes by recording accurate valuations
  • Maintain visibility over asset locations, conditions, etc.

Properly recording assets is key for understanding their impact on finances and making data-driven decisions about future investments.

Leveraging Xero's Features for Asset Tracking

• Xero provides flexible fixed asset categories and settings to track relevant transactional and contextual data such as:
  • Purchase dates, suppliers, amounts paid
  • Expected useful life, depreciation methods
  • Locations, quantities, conditions
  • Maintenance logs, attachments
• Integrations with other systems enable automatic syncing of asset data for easy and accurate tracking over time.

With robust tracking capabilities and integrations, Xero enables comprehensive oversight of valuable business assets for optimized financial management.

How do I record an asset in Xero?

MANUALLY ADD A FIXED ASSET

1. In the Accounting menu, select Advanced, then click Fixed assets.
2. Click New Asset.
3. Enter an Asset Name and select an Asset Type.
4. (Optional) Change the asset number assigned to the asset.
5. (Optional) Complete any other details as required.

To manually record an asset in Xero, follow these steps:

1. Navigate to the Fixed Assets section under Advanced in the Accounting menu. This is where you can view and manage all fixed assets recorded in Xero.

2. Click the "New Asset" button to add a new fixed asset.

3. Enter a name and select the appropriate asset type from the dropdown menu, such as Equipment, Furniture, Vehicle, etc. Make sure to choose a category that accurately reflects the asset.

4. You can optionally edit the auto-generated asset number if desired. This number will be used to identify the asset within Xero.

5. Fill in any other relevant details about the asset - purchase date, purchase price, expected useful life, etc. Providing more comprehensive information will allow you to track and manage the asset more effectively over time.

6. Once all details are entered, save the asset record. It will now appear in your list of fixed assets within Xero, ready to be depreciated, tracked, analyzed

Does Xero track assets?

Xero provides robust tools for tracking fixed assets and valuables to simplify asset management and accounting. By enabling the Fixed Asset Settings, businesses can:

• Create asset categories to track different types of assets (e.g. buildings, vehicles, equipment)
• Assign purchase and sales details including dates, vendors, costs
• Record depreciation to accurately calculate asset value over time
• Generate custom fixed asset reports

With clear visibility into assets, teams can closely coordinate with accountants to ensure financial records and reporting stays current. This helps maintain compliance and make smarter decisions regarding capital expenditures.

For convenience, Xero also integrates with many popular fixed asset apps to automatically sync asset details. Overall, Xero delivers an intuitive solution to monitor assets and liabilities across the business. Tracking assets not only safeguards resources but underpins accurate bookkeeping.

How do I list assets in Xero?

To list assets in Xero, go to the Accounting menu, select Advanced, then click Fixed Assets. This will take you to the Fixed Assets dashboard.

On the Draft tab, you can select the checkbox next to each asset you want to register. Once you've selected all the assets you want to add, click the "Register" button near the top of the page.

This will open the Register Assets window. Review the information for accuracy, then click "Register Assets" to officially add them to your books.

The key things to track for each asset are:

• Asset Name: A descriptive name so you can identify the asset
• Asset Category: Like vehicles, office equipment, etc. This helps group assets.
• Purchase Date: The date you obtained the asset
• Purchase Price: How much you originally paid for the asset
• Depreciation Settings: How you want the value to depreciate over time

Once created, you can view all assets on the Posted tab. Here you can also record disposals, split assets, print asset registers, and more.

Tracking assets in Xero gives you an accurate picture of their current book value over time. This is essential for reporting and making smart decisions about when to replace aging assets.

Using the fixed assets tools also automates depreciation calculations, removing manual work at tax time. Overall, proper asset tracking sets your business up for success as you grow.

How do you track inventory items in Xero?

To track inventory items in Xero, follow these steps:

1. Enter the item's Code and Name when creating the item.

2. Select the "Track inventory item" checkbox to enable inventory tracking for that item.

3. You must then select an Inventory Asset account and a Cost of Goods Sold account:

   • The Inventory Asset account tracks the value of the inventory.

   • The Cost of Goods Sold account records the cost associated with selling the inventory item.

4. The Cost of Goods Sold account field is located in the Purchase section when creating the item.

By checking the "Track inventory item" box and assigning the necessary accounts, Xero will then track the quantity of those items in stock, their cost, and the cost of goods sold when they are invoiced out. This provides valuable reporting on the usage and value of inventory over time.

Let me know if you have any other questions!

sbb-itb-be9f1e0

sbb-itb-be9f1e0

Setting Up Fixed Asset Settings in Xero

This section will cover how to set up Xero to start tracking your valuable resources by category, default useful life, and other specifications.

Configuring Fixed Asset Settings for Optimal Tracking

To get started tracking assets in Xero, the first step is to enable fixed asset handling. Go to Settings > General Settings and turn on "Enable Fixed Assets". This will activate the fixed assets module and related features.

Next, review the default Fixed Asset Categories and Useful Life values under Settings. Xero comes preconfigured with categories like Computer Equipment, Furniture, and Motor Vehicles. The useful life indicates the depreciation schedule. Update these defaults if needed to match your accounting needs.

For example, you may want to add categories for Software Licenses, Leasehold Improvements, or Heavy Machinery. Adjust the useful lives to align with tax requirements. Customizing these settings upfront will save time later.

Creating Custom Fixed Asset Categories

Once the default settings are reviewed, create any additional fixed asset categories that are specific to your business. This helps organize and track assets more efficiently.

For example, a construction firm may need categories for Tools & Equipment, Heavy Machinery, Vehicles, and Job Site Improvements. A retailer may want groups for Store Furnishings, Point of Sale Equipment, and Leasehold Improvements.

Having tailored categories makes it easier to run custom asset reports and calculate tax deductions. It also helps assign appropriate useful lives for depreciation purposes on your assets.

Categorizing Assets for Enhanced Tracking in Xero

With your fixed asset categories configured, you can now categorize any existing assets within Xero. It is also helpful to classify any new asset purchases using the appropriate category when recording transactions.

Consistently categorizing every fixed asset purchase using your custom categories enables advanced tracking, reporting, and analytics. You can filter by category to see depreciation schedules specific to each asset group.

As you build up history, you can also view category-specific metrics like average asset life, maintenance expenses, gain/loss on disposals, or cost per square foot. Granular categorization gives greater visibility into your valuable resources.

Mastering Asset Recording and Tracking in Xero

This section explores ongoing asset management after the initial purchase, including monitoring depreciation, improvements, sales, and other impacts.

Recording Asset Depreciation and Impairments

Xero allows you to set up depreciation schedules for your assets based on the asset type and useful life. As assets are used over time, their value decreases through depreciation. Recording depreciation accurately captures this decline in value on your books.

If an unexpected event causes an asset's value to decrease rapidly, this is called an impairment. Common impairment triggers include:

• Damage or obsolescence
• Changes in technology making an asset outdated
• Declines in demand or selling price for the asset's output

To record an impairment in Xero:

1. Navigate to the asset and edit its details
2. Under "Manage Asset Value", select "Record Impairment"
3. Enter the impairment amount and date
4. Add notes explaining the impairment trigger

Recording impairments ensures your assets are valued properly on financial statements. It also allows you to claim larger tax deductions.

Updating Asset Life through Tracking Improvements

Making significant improvements to an existing asset can extend its useful life. Upgrades like renovations, expansions, and enhancements increase the asset's earnings capacity.

To update an asset's life in Xero after improvements:

1. Edit the asset details
2. Under "Manage Asset Value", choose "Improve Asset"
3. Enter the improvement value and date
4. Update the useful life years based on the enhancement
5. Xero will automatically recalculate depreciation schedules

Tracking asset improvements ensures you maximize their usable lifespan. It also optimizes depreciation deductions over time.

Managing Asset Disposals and Sales in Xero

When assets reach the end of their usable life, you may sell them or dispose of them. To properly record the transaction in Xero:

1. Navigate to the asset and choose "Sell or Dispose"
2. Enter the sale/disposal date and proceeds amount
3. For sales, Xero calculates the capital gain/loss automatically
4. The asset will be completely removed from your books

Recording disposals and sales accurately captures operational gains/losses for taxes. It also keeps your asset portfolio up to date reflecting true economic reality. Maintaining current fixed asset registers ensures financial statements reflect the most recent valuations.

Utilizing Xero's Reporting for Fixed Assets

Xero provides robust reporting tools to help businesses track and analyze fixed assets over time. This empowers data-driven decisions about asset allocation, maintenance, and accounting.

Navigating the Fixed Asset Register in Xero

Xero's fixed asset register captures the full history of each asset, including:

• Purchase and disposal dates
• Cost, accumulated depreciation, and net book value
• Maintenance activities and costs
• Depreciation calculations and timelines
• Attachments like receipts, warranties, manuals

This centralized register enables at-a-glance visibility into all fixed assets.

Generating Custom Reports for Asset Analysis

Businesses can build custom fixed asset reports in Xero, filtering by:

• Asset type
• Department or location
• Net book value thresholds
• and more

These tailored reports deliver actionable insights, like:

• Assets nearing end-of-life for replacement planning
• Under/over-utilized assets to inform purchasing
• Maintenance costs by department

Visualizing Asset Depreciation with Xero Charts

Xero generates charts depicting asset depreciation over time. These provide visual tracking of:

• Depreciation expense each year
• Net book value timelines
• Total estimated useful lifespan

Charts enable teams to quickly monitor asset health

Advanced Asset Management Techniques in Xero

Key takeaways and advice for advancing your Xero fixed asset practices.

Best Practices for Ongoing Asset Management

To effectively manage assets over time, it's important to establish routines for tracking asset details. Here are some recommended practices:

• Conduct regular asset audits to verify assets physically match your fixed asset register. This ensures data accuracy.
• Schedule annual appraisals to update market or fair value estimates, especially for higher-value assets.
• Promptly document any major repairs, maintenance, or upgrades performed on existing assets to track associated costs.
• Take periodic asset photos to visually certify condition, location, asset tags, etc. Include date stamped photos in asset records.
• Designate asset owners and make them responsible for promptly reporting changes, incidents, relocations, disposals, etc.
• Categorize assets by tracking details like location, department, facility, status, criticality to operations, etc. to enable filtering and reporting.
• Establish thresholds that trigger asset inspections, appraisals, or retirement based on age, accumulated depreciation, incidents, etc.

Following routines like these will keep your fixed asset data current, usable, and optimized over time.

Extending Xero Asset Tracking with Integrations

Xero offers open APIs and over 1,000 third-party app integrations to unify wider business data. Here's how these can augment asset management capabilities:

• Use Xero's fixed asset API to sync asset data with other systems like CRMs, ERPs, facility management software etc. This consolidates cross-departmental asset visibility.
• Connect sensor data from facility systems to trigger asset inspections or maintenance when thresholds are breached. This enables predictive capabilities.
• Integrate purchase orders, invoices, budget plans etc. with assets to track associated costs, contracts, projects, warranties etc. in one place.
• Leverage Xero's inventory integration to assign inventory items to assets for component-level tracking and cost allocation.
• Use Xero's online training materials to learn best practices for leveraging APIs and connectors to enhance asset oversight.

Unified data delivers richer asset intelligence to optimize utilization, uptime, spend, etc.

Exploring Additional Xero Features for Asset Management

While designed for fixed asset tracking, other Xero modules can augment capabilities:

• Use project costing to track asset installations, upgrades, maintenance jobs, dismantling etc. as projects. This allocates labor, materials, and other costs to assets.
• Assign inventory items as asset components and use inventory planning to automate replenishments, optimize stock levels, and track consumption.
• Allocate assets to Xero organizations, tracking hierarchies, and users for permissions management. This enables cross-entity oversight.
• Build custom tracking fields to capture specialized asset data like fuel efficiency, output capacity, certifications required etc. Tailor to your needs.

Xero's flexibility helps mold asset tracking to your unique requirements over time.

Practical Steps for Recording Draft and Fixed Assets

An in-depth guide on how to accurately record draft assets and post journals for fixed assets in Xero.

Entering Draft Assets into Xero

To add a draft asset in Xero:

1. Navigate to the Assets section
2. Click New and select Draft Asset
3. Enter details like asset name, value, category, etc.
4. Click Save

This will create the draft asset in Xero but not post it to the general ledger. Draft assets allow you to record assets before they are deployed or in use.

Key things to track for draft assets:

• Purchase date
• Supplier and purchase amount
• Estimated useful life

Once the asset is ready to use, you can convert the draft asset into a fixed asset by clicking Post Asset which will post the value to the fixed asset general ledger account.

Posting Journals for Fixed Assets in Xero

To post a fixed asset journal in Xero:

1. Go to Journals and click New Journal
2. Select Fixed Asset as the journal type
3. Choose the appropriate fixed asset account
4. Enter the fixed asset details and value
5. Click Approve Journal to post

Some key things to include in fixed asset journals:

• Asset name/description
• Purchase date
• Useful life
• Purchase and disposal value
• Depreciation calculation method

Posting the journals accurately will ensure your fixed asset register and financial reports reflect the correct asset valuations over time.

Tracking Asset Depreciation in Xero

Xero can automatically calculate and record depreciation for fixed assets based on the useful life and value you enter.

To setup automated depreciation:

1. Navigate to Settings > Fixed Asset Settings
2. Turn on Calculate Depreciation Automatically
3. Select the default depreciation method
4. Click Save

Now any fixed assets will show the depreciation value deducted automatically in your reports.

You can also run manual depreciation calculations and adjust the useful life at any time from the asset details screen. Tracking depreciation accurately is important for understanding the updated net value of your assets.

Conclusion: Streamlining Asset Management with Xero

Recap of Key Steps for Asset Recording in Xero

Here are the key steps covered for recording assets in Xero:

• Enable Fixed Asset Settings in Xero to start tracking assets
• Create asset accounts for different asset categories like equipment, buildings, vehicles, etc.
• Add new assets manually or import details using the Fixed Asset CSV Template
• Assign details like asset name, purchase date, purchase price, depreciation settings
• Allocate assets to tracking categories to organize and filter
• Record depreciation with automated journal entries
• Run asset reports to analyze values and transactions

Following these best practices will ensure your valuable business resources are accurately captured in Xero for simplified tracking and management.

Future-proofing Your Asset Tracking Strategy

As your business evolves, so too should your asset tracking process in Xero. Here are some tips:

• Review and update asset details regularly
• Create new tracking categories as you acquire other asset types
• Adjust depreciation settings if useful life changes for assets
• Compare actual asset values to net book values
• Continually optimize asset allocation to departments or locations

By keeping your fixed asset data current and adopting agile strategies, you can scale your asset tracking smoothly as your company grows. This will save time on administrative tasks while providing financial insights into your valuable resources.

Related posts

• Recording Employee Expenses in Xero
• Track Expenses in Xero: A Simple Guide
• Top Asset Tracking Software for Accountants
• How to Calculate Depreciation on Fixed Assets in QuickBooks