Buildings

Buildings holds the cost of offices, shops, godowns and factories the company owns, including construction, architect fees and the cost of making the building ready for use. It is depreciated over its useful life, and the IRD's pool rate for buildings is 5 percent a year, so the schedule is long. Repairs that keep the building running go to Repairs and Maintenance; extensions that add floor space or lengthen its life are added to this account. A building still under construction sits in Capital Work in Progress and moves here only when it is ready for use, which is also when depreciation starts. The monthly Depreciation Entry credits Accumulated Depreciation, not this ledger, so the cost stays visible.

Monthly depreciation = (Cost - Salvage value) / Useful life in months; at 5% a year that is Cost x 5% / 12.

1. 01Go to Assets > Asset Category and open Buildings; confirm the fixed asset account is Buildings and the method Straight Line.
2. 02Go to Invoicing > Purchase Invoice > New with a fixed asset item of category Buildings, and Submit.
3. 03Open the Asset from Assets > Asset, set Available-for-use Date, useful life in months and salvage value, and Submit.
4. 04Check Assets > Asset Depreciation Schedule for the monthly amounts.
5. 05Each month end the Depreciation Entry journal posts: Dr Depreciation - Property, Plant and Equipment, Cr Accumulated Depreciation.

Post through an Asset record when a building is bought or finished. Repairs that do not extend its life go to Repairs and Maintenance instead.

Dr Buildings Rs 1,50,00,000, Cr Bank Account Rs 1,50,00,000 for a two-storey office in Lalitpur, with monthly depreciation posted by Journal Entry.