There are 3 ways to write off a Fixed Asset in Castaway:
- Sell the asset for 0
- Revalue the asset to 0
- Depreciate the asset to 0
We generally recommend the first option, Sell the Asset, because it gives you finer control over the depreciation adjustment. However, it forces the writedown loss to show in the Profit & Loss. If you instead want to show it in an Asset Revaluation Reserve, the Revaluation method will work better.
Option 1: Sell the asset for 0
- In the Fixed Asset element, set Allow Asset Sales to Yes (from the sales tab)
- In the Sales section of the data entry area, enter the book value of the asset to be written off in the Asset Book Value line and the accumulated depreciation you want to reverse in the Asset Depreciation line
- The Sale Invoice Amount should be left as 0
This method will reduce both the asset value and the accumulated depreciation in the balance sheet.
Option 2: Revalue the asset to 0
- In the Fixed Asset element, set Allow Revaluations to Yes (from the settings tab)
- From the Revaluation Reporting option, choose how you want to show the revaluation ... either as Other Income in the Profit & Loss, or as a Revaluation Reserve in the Equity section of the Balance Sheet
- In the Revaluations section of the data entry area, enter the new value for the element in the Revaluation Asset To line. If you are writing off the entire asset, enter a very small value (like 0.01).
A sample file is attached for demonstration purpose.
Option 3: Depreciate the asset to 0
- The third method is to use a 100% depreciation rate to write the asset write down to 0. Note that this will leave an Asset Value and Accumulated Depreciation on the Balance Sheet. To do this:
- change the Depreciation Method to Straight Line (Monthly Rate)
- in the writeoff month, set the rate to 100%
- if you are writing off part of an asset, tailor the depreciation rate to suit, or use the Enter Depreciation method instead