How to add equipment to your finance?

In business finance, assets are resources owned by a company that provide future economic benefits. Assets can be physical, such as machinery and vehicles, or non-physical, such as patents.

Assets are generally categorized as current or long-term depending on how long they are expected to benefit the business. To learn more, see the difference between long-term and current assets.

• Short-Term Assets (Current Assets): Assets expected to be used, sold, or converted into cash within 12 months. Examples include prepaid expenses and other short-term resources.
• Long-Term Assets (Fixed or Non-Current Assets): Assets that provide value over multiple years and are not intended for immediate sale. Examples include buildings, equipment, vehicles, and machinery.

Equipment purchased for business use, such as manufacturing tools, computers, machinery, or office equipment, is generally treated as a long-term asset because it provides value over several years.

When you add equipment to your financial forecast, you can enter the purchase cost, useful life, depreciation, salvage value, and whether you expect to resell the asset.

For more information about choosing an asset's useful life, see Depreciation, Amortization, and Determining Asset Life.

Depreciation is the process of spreading the depreciable cost of an asset over its useful life.

For example, if you purchase equipment for $10,000 with an expected useful life of 5 years and a salvage value of $1,000, the annual depreciation would be:

($10,000 - $1,000) ÷ 5 = $1,800 per year ($150 per month)

Upmetrics gives you two ways to add equipment to your forecast. You can describe the equipment and let Finance AI draft the asset group and item for you, or you can create it manually.

Steps to Add Equipment

Adding Equipment with Finance AI

1

Go to the Finance Forecasting module, select the Forecast tab, and open the Assets section.

You will see the guided asset setup where you can describe the equipment your business owns or plans to purchase.

2

Enter a short description of the equipment you want to include in your forecast.

Include details such as the equipment name, expected purchase price, purchase date, useful life, salvage value, and whether the equipment already existed before the plan started.

Use Finance AI to draft the asset based on the information you entered.

TIP: Include the purchase amount, expected purchase date, useful life, and salvage value where possible. This helps Finance AI create a more relevant starting point for your equipment forecast.

3

Finance AI will create a suggested asset group and equipment item based on your description.

Review the proposed equipment, purchase amount, timing, useful life, depreciation, and other assumptions. Use the Edit option if you need to make changes before adding it.

Once the details look correct, keep the equipment selected and add it to your forecast.

NOTE: Finance AI provides a starting point. Review the purchase amount, useful life, salvage value, and depreciation assumptions to make sure they match your actual equipment plans.

4

The equipment will be added to the Assets section of your forecast.

You can review the asset and update its assumptions whenever required.

Adding Equipment Manually

1

If you do not want Finance AI to draft your equipment, click I'd rather set it up myself from the initial Assets setup screen.

2

In the manual setup window, enter a name for the Asset Group and add a name for the equipment within that group.

You can add more assets to the same group or create another asset group if required.

When you are ready, click Create these.

3

Upmetrics will create the asset group and equipment item in your forecast.

Open the newly created equipment item to enter its detailed assumptions.

4

In the asset assumption form, review the asset name and select Long Term as the asset type, since equipment generally provides value over several years.

Enable the applicable option if the equipment already existed before your plan's start date.

5

Choose how you want to enter the equipment purchase:

• One-time Purchase: Use this option when you expect to purchase the equipment once.
• Constant Amount (Recurring): Use this option when you expect to spend the same amount on equipment every month or year.
• Varying Amounts Over Time: Use this option when equipment spending changes from one period to another.

Enter the applicable purchase amount and timing.

6

Depreciation: Enter the expected useful life of the equipment in years and months.

If you do not want Upmetrics to calculate depreciation for the asset, select Do not depreciate.

Enter the Salvage Value (%), which represents the estimated remaining value of the equipment at the end of its useful life.

TIP: Salvage value is the estimated amount the equipment may still be worth at the end of its useful life. Upmetrics uses this information along with the purchase amount and useful life when calculating depreciation.

7

Indicate whether you plan to resell the equipment during the forecast period. Select Yes or No based on your plans.

Review the equipment assumptions and click Save.

8

Once saved, Upmetrics will generate the detailed forecast for the equipment.

Depending on the assumptions you entered, the forecast can include Capital Investment, Depreciation, Accumulated Depreciation, Resell Value, and applicable Gains or Losses.

Once the equipment is added, it will appear under its asset group in the Assets section. You can return to the asset whenever you need to update its purchase price, timing, useful life, salvage value, depreciation, or resale assumptions.

Properly forecasting equipment as a long-term asset helps ensure that your financial projections account for both the initial investment and the equipment's changing value over time.