How to create Parent and Sub Category for Assets

Step-by-Step Guide: Asset Category Setup

1. Navigate to Item Categories

1. Go to Menu -> Inventory → Item Categories (general setup).

2. This page lists all existing categories (procurement, accounts, inventory, invoicing, asset).

2. Create Parent Category

1. Click Create New.

2. Select the company/division if prompted.

3. Enter the parent category name. Example:

   • Plant and Machinery → Parent category for all machinery assets.

4. In Parent Category field select NA or keep it empty.

5. Link the parent category to dummy ledgers for saving/approval purposes (if asked). If it's not mandatory in ERP, then it can be kept empty.

   • Asset Ledger → Vehicle (or appropriate ledger)

   • Expense Account → Depreciation account

   • Accumulated Depreciation → Accumulated depreciation account

6. Click Approve to save the parent category.

⚠️ Note: Parent categories usually do not have ledger mapping for actual transactions, but system requires dummy ledgers to approve.

3. Create Subcategories

1. After creating the parent, click Create New again for subcategories.

2. Enter subcategory name. Example:

   • Vehicles → Subcategory under Plant and Machinery

3. Select the parent category (e.g., Plant and Machinery).

4. Map ledgers for the subcategory:

   • Asset Account → Vehicle or motor vehicle ledger

   • Income Account → Accumulated depreciation

   • Expense Account → Depreciation Expense

5. Scroll down and verify all mappings.

4. Approve Subcategory

1. After verifying all ledger links, click Approve.

2. Add the subcategory.

3. This setup ensures that next time you purchase an asset (like a vehicle), it is automatically linked to the correct ledger accounts.

5. Notes & Best Practices

• You only need to create the parent category once; all future subcategories will link to it.

• Always map asset, expense, and accumulated depreciation ledgers for subcategories.

• Depreciation is posted automatically based on the linked expense/depreciation accounts.

• Each subcategory needs an asset/income/depreciation ledger.

✅ After completing this, the system is ready for asset purchases under the correct categories, ensuring proper accounting for depreciation and ledger postings.