What do we own, what is it worth on the books now, and how much wears out this month?

You pay for a machine once, and its cost goes to expense a little each month

An asset that lasts for years does not go to expense in the month that you buy it. Its cost goes on the balance sheet. Then, each month, a part of the cost moves to expense. Accountants call this depreciation. With the straight-line method, the cost less the salvage value goes to expense in equal amounts over the useful life¹.

The cost of an asset includes the costs that make it ready for use, for example shipping, taxes and installation². So the freight and the installation belong in the 19,200. When you sell an asset, its book value is the cost less the depreciation to that date. The sale price minus the book value gives a gain or a loss³.

The machine went into service on 14 September. Northbrook uses the full-month rule, so September gets a full charge of 160. With the half-month rule, the charge is 80. With the pro-rata rule, it is 160 × 17 ÷ 30 = 90.67. The rule changes the number, so the skill always asks for your rule.

Seven assets at Northbrook Trading on 30 September 2026

Northbrook Trading is a made-up company. It works in US dollars and reports under US GAAP. Its list of assets has six assets and a piece of land on 31 August. The skill's own example has 412 assets. This example is small so that you can check every number. After the September run, and after the owner's yes to the drafts, the list looks like this.

The skill never depreciates land. With some exceptions, land has an unlimited useful life, so nobody depreciates it⁴. The skill checks that the land account has no accumulated depreciation. Under IFRS, each part of an asset with a significant cost gets its own depreciation⁴. That rule is IFRS. Under US GAAP, the parts are optional, so the skill asks for your framework.

The old van sold for $4,000, and the books show a loss of $26,000

On 15 September Northbrook sold its old van for $4,000 in cash. The van cost $30,000, and its depreciation reached $30,000 in August 2025. So its book value was zero. Somebody recorded the sale and removed the cost. Nobody removed the accumulated depreciation.

The skill reads both sides of each sale. A credit to the asset account with no debit to accumulated depreciation is a half entry. The adjustment moves profit by $30,000. It removes the loss of 26,000 and adds the gain of 4,000. The skill drafts that adjustment for a person to post.

One asset on the list is not in the books, and one asset in the books is not on the list

The skill compares the list of assets with the ledger, which accountants call the general ledger or GL. It makes the comparison in two directions, and it reports two separate lists. The two lists have different causes and different owners.

The skill also asks: did somebody post depreciation this month? Yes. The usual monthly entry posted 1,550. But that entry was out of date. It did not include the new machine or the air conditioner.

The skill divides each class's cost by its yearly charge, and compares the result with your policy life. The check is coarse. A difference is a sign that something may be wrong, and the skill reports it as a sign. At Northbrook, the 12.1 years points to the missing machine.

Two repairs bills of $2,500 or more, and two decisions for the owner

Northbrook's threshold is $2,500. An item at or above it goes on the balance sheet. The skill reads repairs and maintenance, small tools and computer expense. It lists each item at or above the threshold, with the vendor, the date, the amount and the account.

The skill also finds a pattern on the shrink-wrap machine invoice. The machine went to the asset account. The freight of 650 and the installation of 1,000 went to expense. It was the same invoice, from the same vendor, on the same date. So the asset was too low by 1,650.

Then the skill checks the other direction: items below $2,500 in an asset account. In September there were none. Small items in the asset accounts make the list larger and create depreciation that nobody tracks.

The skill calculates your book figure, and your tax preparer calculates the tax figure

Every number above is book depreciation. It comes from your own policy: life, method, salvage value and first-month rule. Tax depreciation follows different rules, and it is a different number. The skill keeps the two apart.

US federal tax has its own rules. They include an election called section 179. For 2026, its maximum deduction is $2,560,000⁵. If the accountant uses that election for the machine, the tax deduction can be much more than the book charge of 160. The skill takes that difference from the accountant's schedule, for the tax-book sheet.

The IRS also has a de minimis safe harbor. Its limit is $2,500 for each invoice or item, or $5,000 for a business with an applicable financial statement⁶. The business makes that election each year, with its tax return⁶. It is a tax decision for your accountant. It is a separate thing from your book threshold, although both are $2,500 at Northbrook.

Some businesses post the depreciation figure from their tax return. If you do that, the skill uses your accountant's schedule as the list of assets. It compares the GL with that schedule and calculates no separate charge.

Four draft entries, and none of them posted

1. Add the freight and installation to the machine: 1,650
   Debit machinery 1,650. Credit freight expense 650 and repairs 1,000. The skill's files describe the warning for this case, but not an entry. This example drafts it as a reclassification.
2. Depreciation on the new machine: 160
   Debit depreciation expense 160. Credit accumulated depreciation, machinery, 160.
3. Move the air conditioner from repairs to machinery: 4,200, and its depreciation: 35
   Debit machinery 4,200 and credit repairs 4,200. Then debit depreciation expense 35 and credit accumulated depreciation 35. The skill never credits cash or accounts payable a second time.
4. Adjust the van sale: 30,000
   Debit accumulated depreciation, vehicles, 30,000. Credit the loss on disposal 26,000 and the gain on disposal 4,000.

After these four drafts, the September book depreciation is 1,550 + 160 + 35 = 1,745. No asset has more depreciation than its cost less salvage. For example, the delivery van has 23,400, and its limit is 41,000 − 5,000 = 36,000.

A website, a request to post and a count from 2023

The owner reported no event that can reduce an asset's value. The ledger showed no candidate either. The impairment sheet records "no candidates". The skill never decides impairment from ledger data.

Ten questions, in one message

The skill asks these first, in one short batch. It asks only for what it cannot already see.

1. Use MosoFin for this run, or upload the data yourself?
   MosoFin is the connection to your books and the other platforms you link. With it, the skill reads from there. Without it, you upload the files, and the checks are the same. The skill asks this only if your account has the MosoFin tools. If not, it says once that the run is manual.
2. Which period?
   Required. The period sets the movements, the charge and the roll-forward.
3. Your list of assets, if you keep one: asset, class, cost, in-service date, life, salvage, method and location.
   Recommended. Depreciation for each asset needs it. Without it, the skill offers a draft list from your ledger, for you to check.
4. For each class of asset: the useful life, the method and the salvage policy.
   Required. These drive every depreciation figure. A salvage value of nil is a valid answer, but it must be your answer. The skill never assumes a life or a salvage value.
5. Do you book depreciation by your own policy, or do you post the figure from your tax return or your accountant?
   Required. If you post the accountant's figure, the accountant's schedule becomes the list of assets. Then the skill calculates no separate charge.
6. What is your capitalization threshold?
   Required, and the skill never uses a default. The scan of the repairs accounts depends on it, so the skill asks early.
7. Which rule for the first and the last month: half-month, full month or pro-rata?
   Required, and the skill never uses a default. Accountants call it the convention. It changes every number.
8. Which reporting framework: US GAAP, IFRS or local GAAP?
   Required. The framework decides how to treat parts of an asset, revaluation, and the reversal of an impairment.
9. Which tax jurisdiction?
   Recommended. It explains the differences between tax and book. Tax depreciation is always manual work for your tax preparer.
10. Any event that can reduce an asset's value? When did somebody last count the assets, and who?
    The ledger shows no such event. Only a count proves that the assets exist. The skill records the count as manual work, with its owner and date. If nobody ever counted, that is the finding.

Your policies are yours to set and to review. Under IFRS, a business reviews the useful life, the salvage value and the method at least at each year-end⁴. The skill does not do that review. It asks for your lives at each run. Then it reads the plan back and waits for your yes. The skill's own example reads like this:

"Running the fixed asset register for Northbrook Trading for September, with the ledger read from your Mosofin connection and the register from the spreadsheet you uploaded (412 assets). US GAAP; machinery 10 years and vehicles 5 years, straight-line; capitalization threshold $2,500; full-month convention. Last physical count December 2023, by the operations manager. Shall I go ahead?"

Connect once, or upload the ledger and your list

Eleven sheets, from the asset list to the coverage

The skill asks before it makes an Excel file. If you say no, you get the same sheets as tables in the chat. After you see the results, it offers to save your class policies, your threshold with its start date, your convention and the account map. It also offers to save your framework, your salvage policy, and the count cadence and owner. It saves them only on an explicit yes. It never saves the asset list, the cost of each asset, book values, locations or serial numbers.

Eight terms, in plain English

Fixed asset

Something that the business owns and uses for years, and does not sell. Accountants also say PP&E: property, plant and equipment.

Capitalize

Put a cost on the balance sheet, and do not charge it all to expense now.

Capitalization threshold

The amount below which an item goes to expense, however long it lasts. You set it for your books.

Depreciation

The part of an asset's cost that goes to expense in each period of its useful life¹.

Useful life and salvage value

How long you expect to use the asset, and what it will be worth at the end. Both are your estimates.

Accumulated depreciation

The total depreciation to date. It shows as a deduction from cost on the balance sheet.

Net book value

Cost minus the depreciation to date. It is not what the asset would sell for³.

Convention

The rule for the first and last part-month: full month, half-month or pro-rata.

Where the facts on this page come from

The sources are three sections of two accounting textbooks, an IFRS standard and two IRS pages. We found each one on 28 October 2026 in search results. We did not open the pages, so follow each link for today's wording. What the skill does comes from the skill's own files.

1. OpenStax: Principles of Accounting, Volume 1, 11.3 Explain and Apply Depreciation Methods to Allocate Capitalized CostsBook depreciation. Straight-line spreads the cost less salvage evenly over the useful life. Each method gives different yearly amounts, but the same total over the life.
2. OpenStax: Principles of Finance 2e, 4.4 When Should a Company Capitalize or Expense an Item?Book cost. The recorded cost of an asset includes what makes it ready for use, for example shipping, taxes, installation and changes.
3. OpenStax: Principles of Accounting, Volume 1, 11.5 Describe Some Special Issues in Accounting for Long-Term AssetsBook sales of assets. First, bring depreciation to the date of sale. Book value is cost less accumulated depreciation. The sale price against book value gives a gain, a loss or neither. The cash is not the same amount as the gain or loss.
4. IFRS Foundation: IAS 16 Property, Plant and Equipment (2025 issued HTML)Book, under IFRS. Each significant part gets its own depreciation. With some exceptions, land has an unlimited life and gets no depreciation. A business reviews the life, the residual value and the method at least at each year-end. Northbrook uses US GAAP, where parts are optional.
5. IRS: Publication 946 (2025), How To Depreciate PropertyTax side only. The skill does not apply it. For 2026, the maximum section 179 deduction is $2,560,000. The limit falls when qualifying property in service in the year is more than $4,090,000.
6. IRS: Tangible property final regulations (FAQ)Tax side only. The skill does not apply it. The de minimis safe harbor limit is $2,500 for each invoice or item without an applicable financial statement, and $5,000 with one. It is an annual election with the tax return.

No outside authority backs the threshold scan, the implied-life check, the two-way tie-out, the eleven sheets or the manual-work labels. They are the skill's own rules. We made up Northbrook Trading and every figure in the example for this page. The textbooks and the IRS pages are US sources. IAS 16 is an international standard.