Fixed Assets and Depreciation in Odoo: Setup for Hong Kong SMEs

At APAA, even the small Hong Kong companies we work with own things that lose value over time — the delivery van, the office laptops, the conference-room furniture. Expensing the full cost the moment you buy them distorts your profit for that month and understates the asset's value for the rest of its life. Depreciation is the proper treatment: spread the cost across the years the asset actually serves you.

Doing that by hand means remembering to post a journal entry every month for years on end. Miss one and your books drift. Odoo removes the manual burden entirely — you define each asset once, and it generates every depreciation entry on schedule. This guide shows you how to set an asset up correctly the first time.

Why Bother Tracking Fixed Assets

Beyond keeping your monthly profit honest, accurate depreciation feeds your balance sheet and your year-end accounts. For Hong Kong SMEs, that book treatment also gives your accountant a clean starting point when reconciling to the depreciation allowances claimed in your Profits Tax computation. Get the asset register right in Odoo and the rest of the chain is far smoother.

Creating a New Asset

1. Open the Accounting application.
2. Go to Accounting > Assets.
3. Click Create.
4. Name the asset (we will use "Opal Combo", a company vehicle, as the example).
5. Optionally add an identifier — a licence plate, say — in the reference field.

Setting the Asset's Value

The top of the asset form holds the value fields:

• Original Value — the purchase price (e.g. 20,000)
• Acquisition Date — when you bought it
• Not Depreciable Value (Salvage Value) — the estimated residual value at end of life (e.g. 6,000)
• Book Value — calculated automatically: current value less cumulative depreciation

In this example, a 20,000 vehicle with a 6,000 salvage value leaves 14,000 to depreciate.

You can also apply an Asset Model to pre-fill the depreciation settings — a time-saver once you have several similar assets, and a topic we cover in a separate guide on asset automation.

Choosing a Depreciation Method

Odoo offers three:

Setting the Duration

You enter the number of periods and the period type — months or years — and the difference is not cosmetic:

• 84 months posts a journal entry every month for 7 years.
• 7 years posts a journal entry once a year for 7 years.

Choose months if you want monthly entries, which is the more common and granular approach.

Handy tip: Odoo's number fields accept calculations. Type =7*12 and it returns 84.

Configuring the Computation Options

There are three computation modes:

• Constant Periods — every depreciation entry spans the same length of time. Supports a pro-rata date that adjusts the first and last entries based on where in a period depreciation begins.
• Based on Days per Period — more precise, accounting for months of differing lengths. Also supports pro-rata.
• No Pro-rata — like constant periods, but without adjusting the first and last entries. The pro-rata date field is hidden.

For most cases, Constant Periods is the standard choice.

Setting Up the Accounts

The right side of the form has three account fields:

1. Fixed Asset Account — holds the asset's original value and determines which account group it falls under in the depreciation schedule report. Leave it empty and the depreciation account is used instead. When you create an asset from a vendor bill, this defaults to the account on that bill.
2. Depreciation Account — credited by each depreciation entry; this is where accumulated depreciation builds up.
3. Expense Account — debited by each depreciation entry; this records the cost of the asset losing value.

You can also choose:

• Journal — which accounting journal records the depreciation entries
• Analytic Distribution — if analytic accounting is enabled, allocate the depreciation to specific projects or departments

Reviewing the Depreciation Board

Before you confirm the asset, click Compute Depreciation to generate the board. This tab lays out the full schedule:

We always tell clients to actually read this board before confirming — it is your last chance to catch a wrong duration or method before the entries are generated.

Viewing the Journal Entries

Once you confirm the asset, Odoo creates every depreciation journal entry in draft. Reach them through the Posted Entries smart button at the top of the asset form.

Each entry contains:

• A debit to the expense account
• A credit to the depreciation account
• Amounts matching the depreciation board

Draft entries post automatically when their scheduled date arrives — no monthly reminder needed.

Using the Depreciation Schedule Report

For the bird's-eye view across all your assets:

1. Go to Accounting > Reporting > Depreciation Schedule.
2. Pick the time frame (e.g. the current financial year).
3. Expand the account groups to see individual assets.

The report shows each asset's characteristics, depreciation amounts, and book value — all grouped by fixed asset account.

To include depreciation that has not yet posted, enable the Draft Entries filter. It previews what the schedule will look like once pending entries go through.

The more assets you accumulate, the more valuable this consolidated view becomes — far quicker than opening each asset one by one.

Getting It Right From the Start

Setting up assets is one of those tasks where a small error at creation — wrong salvage value, months entered as years — compounds quietly across the whole schedule. Our advice to clients is to model your first asset carefully, read the depreciation board before confirming, then lean on asset models to keep every subsequent asset consistent.

If you would like APAA to configure your fixed-asset register and depreciation in Odoo so it aligns cleanly with your Hong Kong accounting and tax workflow, get in touch with our Odoo team.