Setting up your depreciation categories and tax classes

The Category list and is a mandatory process where you create the various depreciation profiles to which assets can be assigned, such as Computers, Office Equipment, or Furniture. Within each category, you set up default depreciation criteria for the assets attached to that category. The application uses these depreciation profiles to perform the depreciation calculations.

You can also set up Tax Classes. Tax classes and categories have the same fields and functions but apply to different books. All details within this page are applicable to both.

Adding categories and tax classes

From the Categories or Tax Classes page click "Add (type)" in the top right to bring up the form.

First, fill out the ID and Description fields. The ID should be a short name such as "COMP3" and the Description should be a descriptive text field such as "Computer Equipment (3 Year)".

Category Depreciation Details

The next section on the form is the Depreciation section. This section captures the unique parameters required to perform the depreciation calculations.

Fields

Depreciation Method: A dropdown list of common depreciation methods such as Straight Line Net and Straight Line Gross. All standard depreciation methods are included. If you need custom depreciation, you can do that too. we'll cover that shortly. Start Code: Determines when to start the depreciation calculation. Normally this would be the date in service, but you can configure it according to your specific needs. Years/Rate/Type: Depending on the method you choose, you may need to select the number of years to depreciate the asset and either a percentage rate or dollar amount over the lifetime or on an annual basis. These options may change slightly according to your previous selections. Post Codes: You can set the default post codes for acquisitions, disposals, depreciation, and gain/loss from disposals. Year 1 Tax Credit / Year 1 Depreciation Add-On: This option lets you claim the full tax deduction for eligible assets (like equipment or software) in the first year, following Section 179 deduction in the U.S. tax code and similar deductions in other jurisdictions. By choosing this, you can maximize your tax benefits up front rather than spreading them over multiple years.

Classifications

In WorthIT Fixed Assets, the entire lifecycle of the asset, including location changes, installation costs, service/improvements, and partial/full disposals can be tracked, depreciated, and recorded (if you choose to). The Classifications section in the form will enable you to set standard post codes for these items.

You can use the fields in this section to set the default classification codes for assets under this category. You can still override these classifications on the asset level if required.