TL;DR

This walkthrough explains how to manage fixed asset depreciation in Dynamics 365 Business Central using multiple depreciation books—including company and tax books. It covers how to set up books, copy configurations using templates, populate book values by duplicating acquisition costs, and calculate depreciation across all books. The video also demonstrates how to efficiently add and acquire new assets using the duplication list to automatically update tax books. Overall, it shows how Business Central simplifies tracking financial and tax depreciation without creating extra general ledger entries.

I want to show you the depreciation functionality in Dynamics 365 Business Central. We’ll walk through some basic setup and then some more advanced setup, and finally we will calculate depreciation. We will see how easy the process is and the results that you get. We will also look at how to set up multiple depreciation books, the closing groups associated with those books, and a quick asset acquisition to demonstrate how easily multiple depreciation books can be populated for an asset. Let’s get started.

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Fixed Asset Setup

Default Depreciation Book

This is the Fixed Asset Setup screen. It’s a simple screen, but an important part of it is assigning the default depreciation book. I have the Company book set up as the default, and we will look at this more closely later. The Company depreciation book is the one I use to calculate depreciation and generate general ledger entries for my fixed assets.

Multiple Depreciation Books

In my system, I have three depreciation books set up:

• The Company book

• A California income tax book

• A Federal income tax book

There are important distinctions for the tax books:

• GL integration is turned off, so transactions in these books will not create general ledger entries.

• Tax books are part of the duplication list, which simplifies copying values and transactions.

In contrast, the Company book does generate transactions that post to the general ledger.

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Fixed Asset Posting Groups

On the left-hand side, I have the fixed asset class fields. For each class code, I have GL accounts assigned to different fixed asset transaction types. Out of the box, the posting matrix is smaller; I added additional fields through the Personalization function. Several more fields are available if needed.

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Reviewing the Fixed Asset List

This is my fixed asset list, where I recently added several assets.

Default Depreciation Configuration

On the Fixed Asset Card for a new asset, you will see the Company depreciation book set as the default book. This book feeds into the general ledger. At first, no additional depreciation books are assigned, so I need to add the California and Federal tax books manually.

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Adding Depreciation Books

Manual Addition of Tax Books

I can add tax books manually:

• Select the tax book

• Choose the posting group

• Set the depreciation start date

• Assign the number of years (e.g., seven years for tax)

Depreciation Methods

• Company book: Straight-Line

• Tax books: Double Declining Balance

  • Percentage for seven-year double declining: 28.6%

This completes the manual method of adding depreciation books.

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A Faster Method: Using a Template

Instead of adding books manually for each asset, I can use one asset as a template.

Copying Books from a Template

From the California income tax book:

• Go to Actions → Functions → Create Fixed Asset Depreciation Books

• Select the subclass (e.g., Lab Equipment)

• Apply the template

Repeat the process for the Federal tax book.

Verifying the Added Books

Moving to another asset, I can see:

• The correct tax books were added

• Depreciation method, dates, useful life, and percentages were copied from the template

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Populating Book Values for Tax Books

Copying Acquisition Costs

Newly added assets only have book value in the Company book. To add book value to the tax books:

• Go to the tax book

• Use Actions → Functions → Copy Depreciation Book Entries

• Target the subclass

• Copy Acquisition Cost from the Company book

Repeat for both the California and Federal books.

Reviewing the Journal Entries

This creates fixed asset journal entries for the tax books only—no general ledger entries. I review and post these entries.

Verifying Book Values

On each asset:

• All three books now have depreciation info and book value

• Book values match what was copied from the Company book

• Entries appear accurately across the tax books

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Calculating Depreciation

Company Book Depreciation

Depreciation is always calculated from the same screen. I’ve already depreciated January, so I’ll run depreciation for February:

• Target the Lab Equipment group

• Run depreciation for the Company book

• This creates general ledger entries

Reviewing the GL Entries

Each asset has:

• A fixed asset depreciation entry

• An offsetting general ledger entry

I post the entries.

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Tax Book Depreciation

Next, I run depreciation for the California and Federal tax books:

• Same group of assets

• Creates fixed asset entries only (no GL integration)

I post these entries as well.

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Adding a New Asset

Copying an Existing Asset

To add a new asset quickly:

• Use Copy Fixed Asset

• The new asset includes all depreciation books, but no book values

Acquiring the Asset

Since it’s not yet acquired:

• Use the simple acquisition process

• Select a clearing account

• Enter the cost

• Mark Use Duplication List to copy the acquisition into the tax books

Adding Insurance

I personalize the screen to add the insurance field:

• Select the insurance policy

• Again use the duplication list so insurance also copies to the tax books

After posting:

• Company book shows the acquisition cost

• Tax books show the duplicated acquisition

• All books are updated correctly

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Summary of What We Accomplished

We reviewed fixed asset depreciation in Dynamics 365 Business Central, including:

• Setting up multiple depreciation books

• Using the Company and two tax books

• Adding tax books manually and via templates

• Copying acquisition cost to tax books

• Calculating depreciation across all books

• Using the duplication list for efficient data entry

• Quickly adding and acquiring a new asset

Most organizations use only the Company book to ensure GL entries are generated. However, if you need to track tax depreciation separately, Business Central makes it relatively easy.

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