How do I record fixed assets and depreciation in the books?

What counts as a fixed asset

Items expected to be used for more than one year, such as machinery, computers, furniture, vehicles and renovation.

Recording steps

1. Capitalise at cost: price plus delivery, installation and non-refundable taxes
2. Add each asset to a fixed asset register: description, date, cost, supplier, location, useful life
3. Choose a depreciation method, commonly straight line, and a useful life per asset class
4. Post depreciation monthly or at year end
5. Record disposals and write-offs, with the gain or loss
6. Check the register against the physical assets at least once a year

Set a capitalisation policy

Many SMEs expense items under a set amount (for example RM1,000, an internal policy rather than a legal rule). Write the policy down and apply it consistently.

Land is not depreciated. Buildings are depreciated, while some assets are revalued under policy.

Useful lives and methods are estimates under the accounting standard and should be reviewed regularly. Your accounting policy is your own choice within the standard, so document it.