How to record the purchase of a capital asset using multiple transactions

This article explains how to record the purchase of a capital asset in FreeAgent if you’ve paid for it using multiple bank transactions.

If you paid for a capital asset using multiple transactions, follow the steps below to add a bill for the purchase and then explain the bank transactions once they’ve been imported into your FreeAgent account via a bank feed or uploaded from a bank statement.

Please note that you’ll need level 6 access or above to your FreeAgent account to follow the steps below.

If you paid for the asset using a single bank transaction, find out how to record the purchase of a capital asset.

1. Add a bill

First, you’ll need to add a bill for the total purchase price of the asset.

Enter the relevant details for the purchase in the 'Bill Contents' section and select the relevant asset purchase category from the bottom of the ‘Spending Category’ drop-down menu. You can create custom categories if you need to. If you’re unsure which category to select, please ask your accountant.

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Select whether you’d like any depreciation to be calculated using the ‘Straight line’ or ‘Reducing balance’ method, or whether the asset should not depreciate.

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If you select the ‘Straight line’ method, select the number of years that the asset will be useful to the business from the ‘Asset life’ drop-down menu. Please note that you can select a maximum of 25 years.

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If you select the ‘Reducing balance’ method, enter the relevant percentage in the ‘Depreciation rate’ field. If you’re not sure what percentage to choose, please ask your accountant.

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Make sure that you enter the full amount paid for the asset in the ‘Total Price’ field.

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Once you’ve entered all of the relevant information for the asset purchase, select ‘Save and Review’ to complete the process.

Viewing the asset in your capital asset register

Once you’ve created the bill, the asset will be added to your Capital Asset report in FreeAgent.

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2. Explaining the money paid out of your bank account

Once the relevant bank transactions for the purchase of the capital asset have been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, you’ll need to explain them using the appropriate ‘Type’ and ‘Category’ as detailed below.

Select ‘Bill Payment’ from the ‘Type’ drop-down menu and select the bill created for the capital asset purchase from the ‘Bill’ drop-down menu.

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Select ‘Explain transaction’ to complete the process.

Repeat this process for each of the transactions related to the purchase of the capital asset, including any initial deposits paid.

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What happens next?

Once you’ve explained all the bank transactions related to the purchase of the capital asset, the bill will show as paid in full in FreeAgent.

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