Once an asset had been entered into a journal, even if the journal is unposted and deleted, that asset cannot be removed from the system. This is due to dimension records being created once the line is saved in the system. The workaround for this is to change the name of the asset to something like do not use, or us that asset number for a different asset once you would have a new asset to use that number for.

This workaround should not be needed as D365 F&O should be able to just delete the asset and all its related records