Fixed assets and depreciation in Xero, reconciled

Written by an ACA-qualified finance manager · about the author · Last reviewed 1 July 2026

Fixed assets are a movement schedule at heart: cost less accumulated depreciation equals net book value, rolled forward each month. Here’s how to keep it clean in Xero.

The three numbers to tie

Every fixed-asset category has three balance-sheet figures that must agree between the register and the ledger: cost, accumulated depreciation, and net book value (cost less accumulated depreciation). If the register and the general ledger disagree on any of the three, something’s been posted around the register.

Month-end steps in Xero

• Register new additions. Anything capitalised in the month goes into Xero’s fixed-asset register with its cost, date and depreciation method - not left in a draft or a purchases account.
• Run depreciation. Xero can post the month’s depreciation journal for you; check the charge looks right for the assets held.
• Handle disposals. Remove disposed assets, clear their cost and accumulated depreciation, and book the profit or loss on disposal.
• Tie register to GL. The register’s cost, accumulated depreciation and NBV should each equal the matching ledger balances.

Where it usually goes wrong

An asset bought but expensed to a purchases code instead of capitalised; depreciation run twice or not at all; a disposal removed from the register but not the ledger. As with every line, write down what the balance is and carry it forward - for fixed assets the register itself is that memory, but the odd manual adjustment still needs a note. See reconciling the balance sheet.

Frequently asked questions

Does Xero calculate depreciation automatically?

Xero has a fixed-asset register that can calculate and post depreciation each period based on the method and rate you set per asset. You still need to register additions, handle disposals, and check the charge is sensible.

How do I reconcile fixed assets at month-end?

Tie the register to the ledger on all three numbers - cost, accumulated depreciation and net book value - after registering additions, running depreciation and processing any disposals. A difference means something was posted outside the register.

What if an asset was expensed instead of capitalised?

Move it: reverse the amount out of the expense account and add the asset to the register at cost with the correct date and depreciation method, then catch up any depreciation due. Document the correction.