Fixed Assets in Business Central: Acquisition, Depreciation, and Disposal

Fixed assets in Business Central are tracked on Fixed Asset cards. Each FA card represents one asset and carries a description, classification, location, and the depreciation configuration.

The structure has three layers. The Fixed Asset card is the asset itself. The depreciation book defines how that asset is depreciated. Each card can be linked to one or more depreciation books for different reporting purposes, such as financial accounts, tax accounts, or group reporting. FA Classes, Subclasses, and Locations group assets for reporting.

The FA Posting Group sets the GL accounts that fixed asset transactions hit: acquisition cost, accumulated depreciation, depreciation expense, gain on disposal, loss on disposal, and others. Each FA card is linked to one FA Posting Group, which is normally aligned with the class.

Business Central 2025 Wave 2 (BC27) added an auto-create option for bulk acquisitions. Post a purchase invoice with a quantity greater than 1, and BC generates one FA card per unit, copying the depreciation configuration from a template asset.

Setting up a fixed asset card and depreciation book

Setup runs in three stages.

The depreciation book. Open the Depreciation Books page and create a book. The fields that matter most are the FA Posting Type Setup (defines behaviour for each posting type), the FA Journal Setup (the journal template and batch the FA module uses), and the G/L Integration toggles on the Integration FastTab. The toggles are individual per posting type and control whether posting that type writes to the general ledger or stays in the FA ledger only. Most companies enable G/L integration on the primary book and leave it off on tax-only books.

The FA card. Create a Fixed Asset card from the Fixed Assets list. Set the FA Class, Subclass, FA Posting Group, and Responsible Employee. Open the Depreciation Books action from the card to access the FA Depreciation Books page. Assign one or more depreciation books to the asset. For each assigned depreciation book, set the Depreciation Method, Depreciation Starting Date, and either No of Depreciation Years or Depreciation Ending Date.

Residual amount. Business Central does not have a residual percentage field. Enter the residual as an absolute value in the Ending Book Value field on the FA Depreciation Books page. The field is hidden by default and needs personalisation to surface. Depreciation stops once the book value reaches that amount.

The Depreciation Method field on the FA Depreciation Books page determines the calculation. Standard methods are Straight-Line, Declining-Balance 1, Declining-Balance 2, DB1/SL, and Manual. The manual is for assets you depreciate via journal entries on your own schedule, typically intangibles.

Running and reviewing depreciation in Business Central

Depreciation runs through the Calculate Depreciation batch job. Search for Calculate Depreciation, set the Depreciation Book and the Depreciation Date, and run it. The batch creates lines in the FA G/L Journal for each asset that needs depreciation in the selected period. It does not post automatically. Review the lines and post the journal manually, which gives accounting oversight before the entries reach the GL.

The Depreciation Date is best set to a period-end. Mid-period dates produce partial depreciation that may not match what the period close expects.

Business Central uses a standard 360-day year and 30-day month for depreciation by default. The Fiscal Year 365 Days toggle on the Depreciation Book Card switches to calendar-day calculation, with February always treated as 28 days. Choose the convention that matches your accounting policy.

After posting, the Book Value field on the Fixed Asset Card updates. The FA Posting Date on the card reflects the last depreciation run. Drill into Book Value to see the underlying FA ledger entries.

If a depreciation run is wrong, the Cancel FA Ledger Entries batch job reverses specific entries. The cancellation posts as Fixed Asset Error Ledger Entries, preserving the audit trail. Calculate Depreciation again with the correct parameters.

Disposing of or writing off a fixed asset in Business Central

Business Central handles end-of-life on a fixed asset through three different posting types, each for a different scenario.

Disposal. Use FA Posting Type: Disposal when the asset is sold or scrapped with proceeds. On the Fixed Asset G/L Journal, create a line with the sale amount, set FA Posting Type to Disposal, and choose Insert FA Bal. Account. BC creates the balancing entry against the disposal account on the FA Posting Group and calculates the gain or loss automatically, posting it to the Gains or Losses on Disposal accounts.

Write-off. When an asset is worthless (broken, scrapped without proceeds, lost), the disposal is at zero value. There is a long-standing BC behaviour: posting a disposal with an amount of exactly zero fails with "Amount must have a value". The workaround is to enter £0.01 instead of £0. BC accepts the line, and the resulting gain or loss reflects the negligible amount.

Write-down. When the asset is still in use but its book value needs to be reduced for impairment or obsolescence, use FA Posting Type: Write-Down on the FA G/L Journal. This requires the G/L Integration - Write-Down toggle to be enabled on the Depreciation Book Card. If the toggle is off, posting the write-down fails with a misleading error message about the journal template. Enable the toggle on the depreciation book first.

A disposed asset stays in the system for audit purposes. The Calculate Depreciation batch job skips disposed assets automatically. The asset can only be reactivated by cancelling the disposal entry.

If you are planning a Business Central go-live and want the FA module configured correctly before your first depreciation run, see our Employee Training Packages.

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Sources

• Microsoft Learn: Manage fixed assets

• Microsoft Learn: Set up FA depreciation

• Microsoft Learn: Depreciation methods for fixed assets

• Microsoft Learn: Depreciate or amortize FA

• Microsoft Learn: Dispose or retire FA

• Microsoft Learn: Revalue Fixed Assets

• Ian Grieve, azurecurve: Can a Residual Amount be Set on a Fixed Asset in Microsoft Dynamics 365 Business Central