Home > Financial Accounting, OpenERP, Postgresql, Python > Asset Management by Simple Declining Method in OpenERP

Asset Management by Simple Declining Method in OpenERP

I will use the example from one of my post to customize and use asset management module of openerp. Two steps already mention in my previous post like calculating profit and loss (making balance of income and expenses to zero for the respected year) and forwarding the balances of previous year to next year.

Post 1: Complete asset management example: http://tinyurl.com/39tmczh

Post 2: Calculating profit and loss: http://tinyurl.com/3ya4nfz

Post 3: Balance forwarding to new year: http://tinyurl.com/2f8laku

In this tutorial I will refer the to post1, post2 and post3 to eliminate the redundancy steps and I follow the steps of post1.

Step 1:

a. Create following three accounts from Financial Management → Configuration → Financial Accounting → Financial Accounts → List of Accounts.

  1. Cost of my_asset (Account Type= asset, Internal Type= Others)
  2. Accumulated Depreciation of my_asset (Account Type= asset, Internal Type= Others)
  3. Depreciation Expense of my_asset (Account Type= expense, Internal Type= Others)

b. Create a journal for buying asset entries and asset depreciation entries from Financial Management → Configuration → Financial Accounting → Financial Journals.

c. Create a business partner from we will purchase new asset; from Partners → partners → Press New Button.

Step 2:

a. Create an asset having name ‘my asset’ from Financial Management → Configuration → Assets → Assets → Press New Button.

Enter the information like below

Asset: my asset

code: my_asset

Asset Category: Vehicle (create if not available)

Method Type: Define any Method like ‘my asset method’

Depreciation Board:

Period: Asset purchasing period

Computation Method: Progressive (its a simple declining method nor 200% nor 150%)

Number of Intervals: 5 (life in number of year)

Intervals Per Year: 1 (per interval depreciation calculation)

Progressive Factors: 0.05 (5%)

Salvage Value: 0 (u can mention the scrap value here if u know)


Asset Account: Cost of my_asset

Depr. Expense Account: Accumulated Depreciation of my_asset

Depreciation Account: Depreciation Expense of my_asset

Journal: journal (created in step 1)

After providing these information press save button.

b. Now provide asset cost value (I am assuming that we purchase new asset) by clicking the button of initial value. Provide the following entries in ‘Initial Values’ form.

Period: Select the period in which my_asset purchased.

Date: date of purchased

Description: purchase vehicle from partner.

Asset Counter Account: select partner payable account (created in step 1)

Base Value: 17000

after providing above information press button ‘set initials’.


  • You will notice some button will be introduce on same asset form,
  • Method state; open (means when u press the button ‘Initial Value’ state of asset becomes open from draft. All those asset having state open will not be deleted)
  • when u check the Financial Management → Charts → Charts of Account or Financial Management → Entries Encoding → Entries Encoding by Move or simply from the Entries tab of same form where u create the asset. An accounting entry is created i.e.

Cost of my_asset (Dr) 17000

Partner Payable acc (Cr) 17000

Step 3: Before explaining the step3, please give 5 minutes to post 1 (Asset management complete example).

You will notice the we (accountants) perform three steps for each asset in per year according to its life.

  • First: Calculate the depreciation for an asset and pass accounting entries like depreciation expense will debit and accumulated depreciation of asset will be credit for the year. This will cover in step 3.
  • Second: We calculate the profit and loss for the current year. In this step the balance of depreciation expense of asset will be zero for next year. These steps already mentioned in post 2 mention above.
  • Third: Forwarding the closing balances of current year to next year opening balance. In this step balance of cost of my asset and accumulated depreciation of asset will be forward to next year as opening balance. These steps already mentioned in post 3 mention above.

I will explain step 3 in this tutorial for a single year, for remaining year (according to asset life) perform the same step 3 for calculation of asset depreciation in openerp.

After performing step 3, I will assume that you will properly perform the steps of calculating profit and loss and forwarding balances to next year according to mention in post 2 and post 3. Now see how to calculate the depreciation of an asset in openerp.

Calculation of Asset depreciation:

From Financial Management → Periodical Processing → Assets Calculation → Compute Assets. Provide the following information.

Period: Select the period of fiscal year for which we calculating asset depreciation.

Date: like 31 of December of 2011

Asset Category: Vehicle

Asset Method Type: my asset method

Press button ‘Compute Asset’.

This will create accounting entries of my asset for the year of 2011.

Accounting Entries are;

Depreciation of my_asset (Dr) 850

Accumulated Depreciation of my_asset (Cr) 850

Step 4: Perform steps of post 2 and post 3 for the year of 2011. For each next year (according to asset life) perform these three steps in order of step 3, post 2 and then post 3.

OpenERP will automatically closed the asset after asset last depreciation caluculation.

Accounting Entries done By OpenERP:

Below are the accounting entries done by openerp for my_asset in 5 years, you can check these entries by tab of Entries in the same form where u created asset (Financial Management → Configuration → Assets → select respected assets from list)

Particulars Year Dr Cr
1 Cost of Asset Purchasing of asset Start of 2011 17000
Partner Payable Acc 17000
2 Depreciation of my_asset Depr of 2011 End of 2011 850
Accumulated Depreciation of my_asset 850
3 Depreciation of my_asset Depr of 2012 End of 2012 807.5
Accumulated Depreciation of my_asset 807.5
4 Depreciation of my_asset Depr of 2013 End of 2013 767.13
Accumulated Depreciation of my_asset 767.13
5 Depreciation of my_asset Depr of 2014 End of 2014 728.77
Accumulated Depreciation of my_asset 728.77
6 Depreciation of my_asset Depr of 2015 End of 2015 692.33
Accumulated Depreciation of my_asset 692.33

  1. November 24, 2010 at 6:06 am

    hello I was luck to come cross your Topics in wordpress
    your post is marvelous
    I learn much in your blog really thanks very much
    btw the theme of you blog is really excellent
    where can find it

    • November 24, 2010 at 8:06 am

      @bet thanks

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