[ADVANCED FEATURES] Asset management

Summary

This video explores asset management, a key aspect of accounting crucial for businesses. It explains the depreciation process, which spreads the cost of assets like cars and laptops over their useful life, offering fiscal benefits. The video demonstrates how to set up and automate asset management using Odoo software, covering linear and aggressive depreciation methods, asset models, and vendor bill configurations. It also addresses frequently asked questions about handling existing assets, depreciation reports, and automation, providing a step-by-step guide for efficient asset tracking and accounting.

Takeaways

• 📊 Asset management is crucial for accounting and helps manage business resources efficiently.
• 🚗 Businesses purchase tools like cars, laptops, and software, which are considered depreciable assets.
• 📉 Depreciation allows companies to allocate the cost of an asset over its useful life, offering fiscal benefits.
• 🔄 Depreciation reduces the annual taxable income by spreading the cost of assets over time.
• 📅 Different depreciation methods exist, such as linear (equal amounts each year) and aggressive, which accelerates the expense early on.
• 🇧🇪 Belgium uses a specific aggressive linear depreciation method unique to its accounting practices.
• 🛠️ Asset models in systems like Odoo help automate asset management and depreciation processes.
• 💻 A use case in Odoo shows how a MacBook Pro purchase is depreciated monthly over three years using a linear method.
• ⚙️ In Odoo, fixed assets are tied to specific accounts, and automated depreciation schedules can be set up based on the asset model.
• 📋 Depreciation schedules and reports in Odoo allow for easy tracking of assets and their decreasing values over time.

Q & A

What is the purpose of asset management in accounting?

Asset management is key to accounting as it helps businesses manage their assets like tools, materials, and equipment. It ensures that the costs of physical assets are allocated over their useful life, optimizing tax benefits and business operations.

What is depreciation and why is it important?

Depreciation is an accounting method of allocating the cost of a physical asset over its useful life. It is important because it allows businesses to spread the cost of an asset over time, providing a fiscal advantage by reducing taxable income through increased expenses.

How does linear depreciation work?

Linear depreciation divides the cost of an asset evenly over its useful life. For example, if a car costs €12,000 and has a useful life of 3 years, the company would depreciate €4,000 each year.

What is the aggressive linear depreciation method?

Aggressive linear depreciation allows a company to depreciate more of the asset’s cost at the beginning of its life and less as time progresses. It is specific to certain countries like Belgium.

How does Odoo automate asset management and depreciation?

Odoo uses asset models and configurations to automate asset creation and depreciation. When a vendor bill is posted with a fixed asset account, Odoo creates an asset record and automatically generates future depreciation entries based on predefined rules.

What steps are required to configure an asset in Odoo?

First, an asset model must be created with details like the depreciation method and duration. Then, the asset is linked to a fixed asset account. When a vendor bill is posted, an asset is created in draft mode, which can later be confirmed and managed.

How can users manually create assets already in the depreciation process?

Users can manually input the original value, acquisition date, and depreciation method for assets already being depreciated. Odoo allows users to specify the existing depreciated amount and number of past depreciations to continue from the current period.

Can you automate asset creation from miscellaneous operations instead of vendor bills in Odoo?

No, Odoo does not support automatic asset creation from miscellaneous operations. Assets can only be created automatically through vendor bills.

How does Odoo handle the posting of depreciation entries?

Odoo can automatically post depreciation entries at the accounting date without requiring manual intervention. Once the asset is confirmed, future depreciation entries are created and scheduled to be posted automatically.

What reporting options does Odoo offer for asset management?

Odoo provides a depreciation schedule report that shows detailed information about all assets, including acquisition dates, depreciation methods, asset values, and book values. Users can filter the report by periods and include forecasts of future depreciation.

Outlines

00:00

💼 Introduction to Asset Management and Depreciation

The speaker introduces the concept of asset management as a key aspect of accounting and business operations. Businesses need to purchase various tools and materials, such as cars, laptops, and software, which are considered depreciable assets. Depreciation allows businesses to allocate the cost of these assets over their useful life, providing a fiscal advantage by reducing taxable income. Different methods of calculating depreciation, like linear and aggressive depreciation, are briefly mentioned, with the linear method being explained in more detail.

05:01

📊 Setting Up Asset Models and Depreciation in Odoo

The process of automating asset management in Odoo through asset models is described. These models allow businesses to preset configurations such as depreciation methods, periods, and accounts. The speaker walks through the steps of creating an asset model for a MacBook Pro with a linear depreciation method over 36 months. The importance of linking the model to the correct fixed asset account and configuring it for automatic asset creation when posting vendor bills is emphasized.

10:02

🖥️ Configuring and Managing Fixed Assets in Odoo

This section covers the detailed process of configuring and managing fixed assets in Odoo. The speaker explains how to assign a fixed asset account when creating a vendor bill and how Odoo automatically generates an asset form based on the chosen asset model. The speaker demonstrates the process with a MacBook Pro purchase, showing how to input the correct account, confirm the bill, and review the asset form with all relevant depreciation information. Additional features like managing multiple assets in one bill and automating depreciation entries are also highlighted.

15:03

✅ Confirming and Automating Depreciation Entries

The speaker explains the next steps after confirming an asset in Odoo. Once confirmed, the asset enters a 'running' state, and the depreciation entries are generated automatically for the entire period. The speaker highlights that users don't need to manually post these entries, as Odoo will automatically post them on the correct accounting date. The convenience of this feature is emphasized, along with how users can generate reports to track the depreciation schedule and forecast future depreciation movements.

Keywords

💡Asset Management

Asset management refers to the systematic process of maintaining, upgrading, and operating physical assets in a cost-effective manner. In the video, asset management is highlighted as a critical component of accounting and business operations, involving the purchase of tools like laptops, vehicles, and software to ensure the smooth functioning of a business. It also includes managing the depreciation of these assets over time.

💡Depreciation

Depreciation is the method of allocating the cost of a tangible asset over its useful life. The video explains that businesses use depreciation to spread out the expense of an asset, such as a car or a laptop, over its lifespan rather than recording the cost all at once. This method provides a fiscal advantage by reducing taxable income over several periods.

💡Linear Depreciation

Linear depreciation, or straight-line depreciation, is a method where an asset’s cost is spread evenly over its useful life. In the video, linear depreciation is discussed as a common approach where an asset, such as a MacBook Pro, is depreciated monthly over three years, resulting in equal depreciation amounts each month.

💡Aggressive Depreciation

Aggressive depreciation is a method where more of an asset’s value is depreciated at the beginning of its useful life. The video briefly mentions this method, contrasting it with linear depreciation, and notes that it is more commonly used in Belgium, reflecting how depreciation strategies can vary by country.

💡Asset Models

Asset models in accounting systems are pre-configured templates used to automate asset management processes. The video demonstrates how asset models in the software allow users to input fixed configurations, such as depreciation methods and periods, to simplify asset tracking when creating vendor bills.

💡Fixed Asset Account

A fixed asset account refers to the ledger in the chart of accounts where assets that are long-term, such as vehicles or computers, are recorded. The video explains how businesses must link an asset model to a fixed asset account to track and depreciate assets correctly, ensuring accurate financial reporting.

💡Vendor Bill

A vendor bill is an invoice that a business receives for goods or services it has purchased. In the video, vendor bills are key to the asset creation process, as they are linked to fixed asset accounts. Once a vendor bill for a purchased asset, like a laptop, is confirmed, it automatically creates a record for that asset in the system.

💡Odoo

Odoo is an open-source business software that helps companies manage various operations, including asset management and accounting. The video focuses on how Odoo facilitates the asset management process, from configuring asset models to automatically handling depreciation entries, simplifying the workload for businesses.

💡Depreciation Board

A depreciation board is a schedule that outlines the future depreciation entries of an asset over time. The video explains that in Odoo, once an asset is created and configured with its depreciation method, the software generates a depreciation board showing the amounts and dates of future depreciation postings.

💡Book Value

The book value of an asset is its original cost minus accumulated depreciation. The video highlights how, over time, the book value decreases as the asset is depreciated. For example, the video shows how a MacBook Pro’s book value declines each month as it undergoes linear depreciation until it reaches zero.

Highlights

Asset management is a key part of accounting for businesses, covering tools and materials used over a long period.

Depreciation allows businesses to allocate the cost of assets over their useful life for fiscal advantages.

The goal of depreciation is to reduce tax liability by spreading out asset costs over multiple years.

The linear method of depreciation divides the total cost evenly over the asset's useful life.

Aggressive depreciation involves a higher initial expense, which gradually decreases over time.

Asset models in accounting systems allow preset configurations for managing depreciation automatically.

An asset model needs to be linked to a fixed asset account in the chart of accounts for automated asset creation.

In Odoo, assigning a fixed asset account during vendor billing will trigger automatic asset creation.

Using the linear method, a MacBook Pro was depreciated monthly over three years, showing how asset models are set up in Odoo.

Automated asset management in Odoo includes creating draft depreciation entries for user validation before posting.

Depreciation entries can be posted automatically at the end of each accounting period without manual intervention.

Assets that are already in depreciation can be added manually, including specifying existing depreciation amounts and schedules.

The depreciation schedule report provides an overview of all existing assets, including acquisition dates and depreciation status.

For assets already in the depreciation process, Odoo allows continuation of the depreciation schedule without creating past entries.

Automated features in Odoo can simplify asset management, such as the OCR feature for consistent expense account allocation in vendor bills.

Transcripts

hello dear doers and welcome to this new

video about

asset management asset management is

really one of the keys of

accounting and how a business needs to

be conducted

so at some point in the business life

people need to buy tools and material

in order to conduct the business

properly for example they need to buy a

car they need to buy a laptop they need

to buy

licenses software and so on all these

can be what we call depreciated in order

to reflect their cost

throughout a long period of life and

we're going to see together what this

depreciation concept means and how we

can

manage that in a two so depreciation

is an accounting method of the

accounting method of allocating the cost

of a physical asset

over its useful life or life expectancy

so the goal here is a fiscal advantage

because

we are going to divide the cost of the

assets throughout the asset life so when

you buy

a car for example so it costs you you

know dozens of thousands of euros so

it's

quite costly and is going to be

represented

on one period of your uh the purchase is

going to be represented on one period of

the year

uh the year you bought it but you know

the cost is going

needs to be split throughout the uh the

life expectancy of the car

because you use it for more than one

year more than one

one uh period and the physical advantage

of

splitting the expense throughout

the um the the life expectancy is that

then you're going to get more expenses

in your p l and then so your uh

total benefit of the year is going to be

little decrease and then you can

pay then less taxes at the end of the

year of course

you have different methods for

calculating depreciations

the first one is linear so basically

you're going to take the whole amount

and you're going to divide it by the

amount of

the number of depreciations the

aggressive

so here you're going to you're going to

depreciate a little bit more at the

beginning and then less less less

a bit less every time for each

depreciation

and aggressive linear is something that

is belgium specific so it's

only a method that needs to be used for

this country

only in order to make that work you know

do and automate the asset management

process we have what we call

asset models so these models allow you

preset configurations to complete the

asset mandatory information

which are the method the period the

accounts the analytics

analytics are facultative but you can

also include them in the asset model

it will allow you the automated creation

of an asset when posting a related

vendor bill

what happens basically in ado when you

create an asset

well first you have to design the asset

model so you have to create it

and this asset model needs to be linked

to

a fixed asset account in your chart of

accounts and all there are also some

necessary configurations

on the account itself afterwards when

you create the vendor bill you're going

to assign this fixed asset account

instead of an expense account

and when you post this bill an asset is

going to be created

so let's test that out in a use case

for fping cars that would like to manage

their assets depreciations in udu

this year they bought the following

fixed asset which is a macbook pro

for uh 2500 euros with uh

so the depreciation is going to follow a

linear method with

monthly depreciation for three years

so let's go in or do just to check that

out how are we going to do that so first

let's do the uh configurations so i'm

going to go

in the configuration menu and check for

the asset models

so i'm going to create a new one uh

here so i'm going to say for all my

laptops i

always want to have a straight line so

linear method

and i'm going to say uh so it was linear

for three years

but it's a monthly depreciation so here

i just have to put

36 months and i'm going to say i'm going

to choose my ass

fixed assets so it needs to be a type

fixed asset of course or immobilization

so here i have non-current assets or

fixed assets that will be

both of them and um not this one

this one and i'm going to choose uh

the one for furniture and vehicles

so this is the fixed asset account that

i'm going to choose in belgium we use a

different one for depreciation

but in other countries it can be the

same account as well i'm just going to

create a new one

because for um

friends and belgium mainly continental

accounting you would use a different

account for your depreciations

and that's easy for example that way we

can see the difference i'm just going to

choose a non-current assets

and keep it that way

with the code and save and my expense

accounts

for my depreciations and the journal you

want to go to have the depreciation

entries to go in

so i'm going to put my miscellaneous

account and that's it for the asset

model

once this is done i need to

fill in the information on the fixed

asset account so i'm going to click on

the fixed asset

and as you can see when i choose a

non-current asset type

or a fixed asset i have

it's actually the same thing in here you

have the automate asset

option that is available and here i want

to automate it and my best practice

would be always creating draft because

you want the user to validate the asset

before we confirm it

and you can choose an asset model that

you have created so here

every time that we're going to use this

uh this account in a vendor bill

once we confirm the bill then we're

going to create a new

asset form that will follow its

own depreciation schedule

it can happen that you have you may

purchase you know multiple laptops in

one bill

but you still want to have different

asset forms for each of the laptops

in that case you can select the manage

items

option which means that it will make

as many asset records as there are

quantities in the vendor bill here i'm

not going to put it because i'm not

interested in it right now

i have done my uh configurations what

i'm going to do is

take a vendor bill here and i'm going to

upload my

uh my um

my bill here so i have a bit

i have my draft bill with my

preview with my pdf here and this is my

invoice for my bill for my apple my

macbook pro

and i'm going to refresh the ocr if it's

willing to do it

it's not finished yet hey okay perfect

so they have uh

created the i have a vendor here with my

information

in here as well i just need to change

the text because it was not

non-eu but belgian tax

in here so i have the only thing i have

to change

is my account which is going to be my

fixed asset account

instead of a classic expense account

when you use the ocr

if you have multiple bills like this um

since you will confirm the first

vanderbilt afterwards it will be able to

detect also the proper

account thanks to the algorithm so

remember we talked about this

for the documents management so the

algorithm will give you the

the mostly used combination between the

vendor

and the label so if it detects the same

label

with this vendor it will give you a

every time the right account so here

it's my fixed asset account but

here's it's the first time i have to

change it manually of course

i'm going to confirm and you see that

once i confirm i have a new spot button

created with

an asset here it's in red because it's

in draft and

it hasn't been created it hasn't been

confirmed yet

so i'm going to click on it

and i reach the proper uh

asset form with the information related

to

this this

to this uh purchase i'm sorry so in the

original value it takes the

vat excluded amount of course uh because

we don't

depreciate vt taxes um i have the

related purchase related to it so i i

can always get back

to the related bill i here on the

journal entry so there's no issue

and you see that the asset model that

i've selected for that fixed asset

account has filled in for me all the

information that i needed so the method

the duration um the um

the accounting information for the

accounts

and if i haven't activated the analytics

yet so we don't see it but

you could also mention some analytic

dimensions in here

if you want to see how it will be

depreciated before confirming it you can

click on compute depreciation and what's

going to happen is that you're going to

have the depreciation board created

and you're going to have a preview of

all the future entries

for all the um the depreciations

so here since i'm in linear in straight

line

all the depreciations are equal uh in

amount

and you can see when they are going to

be depreciation depreciated so every

every last day of the month because it's

a monthly appreciation

so here i'm good to go and what's going

to happen is that i'm going to

confirm the

assets so here it goes in running state

and you have

the depreciation board everything here

corresponds to

a journal entry so every blue line here

is a journal entry

in draft so all these exist and you can

see this here through

the smart button you have all the

existing entries

at that point you don't have to do

anything else you don't have to

post them on a monthly basis

because when you click on it you see

that i have a message saying

this move is configured to be posted

automatically at the accounting date

so the accounting date here is the end

of this month

and uh the option related to that is the

in is in the other info tab with the

post automatically

so it's just here so that when the

accounting date comes up

it will post automatically the entry so

that's actually super convenient because

in that case

once you've validated the asset you

don't have anything else to do

if you want to check what has been

happening with your assets on an

aggregated basis you can

go in the reporting section and you're

going to have

the depreciation schedule report

where you'll be able to see all the

assets existing in your system

the confirmed assets and you're going to

be able to see the information related

to it so

the acquisition date the first

depreciation the method

the rates the asset value

so here the depreciation schedule needs

to show

the movements throughout the period

you've selected so here don't forget you

have date filters again so you could

choose also

shorter periods if you want to so here

for example

i have purchased this new asset

throughout the year so it

is in the plus section and the total of

it at the end of the year

should be well the same amount of course

and the deepest in the depreciations i

don't have

anything yet because no entry has been

posted

but you can do some forecasts anyway

because you could decide to

include unposted entries and in that

case you see

the whole amount that is going to be

posted

throughout the year so from january 1st

to 31st of december

um and see that here we have multiple uh

we have like six different uh

depreciations to go

until the end of the year and the book

value

is basically the uh value of the assets

minus the depreciations the percent

depreciations

if i decide to go a year further

here you see that the forecast is going

to change

so i have in at the beginning of january

20

2022 i'm gonna have the existing

depreciations from 2021

and i'm gonna have the movements from

the year 2022

and the value is going to decrease so

every time that

um every time that throughout the

the life expectancy of the asset the

book value is going to decrease

and it will go down up to uh down to

zero

so that's the goal is that the book

value is down to zero at the end of the

depreciation

schedule

let's talk about the frequently asked

question about asset management

so first uh how do i create assets that

are already

in the depreciation process in my

accounting that's actually

a question that comes that comes up a

lot because

when you implement a client's accounting

they always have some assets in the

system

and in v14 we have new uh

field that enables you to do that

without creating the past entries

so in the assets you're going to create

them manually so they are not going to

depend on

existing bills and let's say we have uh

you know opening assets

you're going to put the original value

the proper the the proper acquisition

date

um the information here the depreciation

method is going to remain the same

the fixed uh the accounts are going to

be the same

but you see here you have three new

fields that are only visible if you're

in developer mode so you need to

activate the debug mode

and you can decide to assign the

existing

depreciated amount so what has already

been depreciated depreciated in the past

sorry

so here if we um depreciate on a 10-year

scale

and it's already been three years i'm

going to put

the depreciation depreciated amount to

300

with three existing depreciations and

the first

depreciation date was uh the 31st of

december

uh three years ago 2008 2017.

and here the only important thing that

you need to remember when you do this is

that the duration

needs to reflect only the future

depreciation so here we're going to put

seven um start depreciating

at the end of this year so that's fine

and we bought this

uh in may 2017

just to make it a bit consistent i'm

gonna put my account

here and my expense account so the

accounts don't change at all

it's just the way we deal with the

existing depreciation schedule

and how we adapt the depreciation method

in order to make that work we're going

to compute and you see that in the

compute the depreciation board i don't

have

10 years as it it is

initially planned for this asset but i

have

the remaining seven depreciations for

100 each so we

resume the depreciation board thanks to

these depreciation schedule

items and we don't have to create past

entries for that

work and once we confirm this um

yeah no i made a mistake sorry because i

have to put the proper depreciation date

so i put 17th but it's what's supposed

to be this year of course because we

resume

the um the appreciation so let's start

over

and put 2021 instead

um yeah seven years nothing has changed

on that case

depreciation

[Music]

no my bad again

this one is correct and this is the one

that is not correct

here start depreciating compute

and you see here that we start indeed on

2021.

i'm gonna put just yellow that way we

can identify it in the report

and we're going to confirm and now we

are back on track with the proper

depreciations and if i check the

depreciation schedule

here you see that my testilo here has

the proper acquisition dates

uh with the first depreciations get

representing

indeed the uh the first on the 2017 and

in 2017 sorry the asset amount is

correct the depreciation from the past

are also represented

and uh you're going to have the future

depreciations taken into account with

the proper book value

so this is only something that is

available in v14 unfortunately

when you're in v13 and previous versions

you need to

import the assets as they should be with

the whole depreciations

trigger the creation of uh past entries

making a reverse and then afterwards

you'll be able to have your assets

going on in the system next

is it possible to have a hierarchy in my

depreciation reports

it is and you've probably already seen

it you see i have the hierarchy for my

account my fixed asset account and it is

due to the filter hurricane subtotal if

i take it out i would just have

the list of assets in it

next question i don't like having the

entries already in draft in my

accounting can i remove them

no you can't that's something that can't

be that can't be done and

it will just bring problems so don't do

it and challenge this requirement

i know it's a bit uh frustrating to see

all this and confusing more uh

more or less but here the what you see

here are journal entries so if you

decide to delete those

then your depreciation board is going to

be empty so i don't advise i don't

recommend

deleting the removing them that's not

that's not a possibility

do i have to filter every month the

depreciation entry

to uh and post them manually no uh

as i said there is this post

automatically feature

that will enable you to to fill in the

information

to post automatically the the entries so

you don't have to do anything one

once the asset is confirmed and last

question can i automate the creation of

an asset

through a miscellaneous operation

instead of a vanderbilt no you can't

that's not possible

in the system you can you can only go

through the

vendor bills that's it for me in this

video thank you for watching and see you

in the next topic