Explain asset purchases and disposals

Equipment you buy to keep and use - a laptop, a van, machinery - is a capital asset, not an everyday expense. When the purchase or the eventual sale shows up in your bank account, explain it with the dedicated asset types. Not sure whether something qualifies? Start with What are capital assets?.

Explain an asset purchase

1. Go to Banking, open the account, and click the money-out transaction.
2. Choose the Type Purchase of Capital Asset.
3. Pick a Category from the Capital Assets group, and set the VAT rate if VAT applies.
4. Choose a Depreciation method: Straight line (then pick an Asset life of 1 to 25 years), Reducing balance (then enter a Depreciation rate as a percentage), or No depreciation.
5. Choose Add. You can also attach the purchase invoice to the explanation.

The asset joins your asset register and starts depreciating on the method you chose - see Depreciation.

Explain an asset disposal

When you sell an asset, the money arriving is not sales income - it is a disposal.

1. Click the money-in transaction and choose the Type Disposal of Capital Asset.
2. Under Asset, pick the asset from the list of ones you previously purchased - each shows its description, type and original cost.
3. Set the VAT rate if VAT applies, then choose Add.

Kontala takes the asset off your books and works out the accounting effect of the sale price - see Dispose of a capital asset for what happens to the figures.