The fixed Asset Depreciation documents are generated according to the depreciation method assigned to fixed assets. To calculate depreciation for fixed assets, first, enable the Depreciation of Fixed Assets option in your ERP system. Below is the overview of the depreciation calculation methods, parameters, and methods of depreciation

Depreciation Calculation Methods

Depreciation can be calculated either automatically or manually:

1. Automatic Calculation:

   • Go to Accounting > Service Tools > Month-End Closing, select Calculate Depreciation and click Execute. The system will automatically include depreciation in the month-end processing.

2. Manual Calculation:

   • Go to Asset Management > Fixed Asset Documents > Fixed Asset Depreciations and create a new document. Click Calculate to list all active fixed assets. Use the Manual Processing button to adjust depreciation amounts or add specific assets manually. Assets marked for manual processing will not be included in the automatic calculation.

Depreciation for an asset stops when its net book value equals its Salvage Value or zero if no Salvage Value is set. You can review net book values through the Depreciation Statement report.

Accounting Parameters for Depreciation

To enable depreciation calculation, specify these parameters for each asset:

• Gross Cost: Includes the initial cost plus any additional expenses.
• Salvage Value: The asset's residual value after use.
• Depreciation Method: Choose from Straight Lines or Units of Production.
  • Straight Line: Enter the Useful Life in months. Depreciation is calculated as (Gross Cost - Salvage Value) / Useful Life.
  • Units of Production: Enter Estimated Production Volume. Depreciation is based on usage.

Initial parameters are set in the Fixed Asset Entry document. For re-assessment or capital improvements, use the Changes of Fixed Asset Parameters or Capital Improvements to Fixed Assets documents to update values and recalculate depreciation.

Depreciation Methods

• Straight-Line Depreciation:

  • Calculation: Monthly expense = (Gross Cost - Salvage Value) / Useful Life.
  • Accumulated Depreciation: Total of prior months’ depreciation.
  • Net Book Value: Gross Cost - Accumulated Depreciation.

• Units of Production Depreciation:

  • Calculation: Monthly expense = Month's Usage * (Depreciable Cost / Estimated Production Volume).
  • Accumulated Depreciation: Sum of depreciation from all months.
  • Net Book Value: Gross Cost - Accumulated Depreciation.

The "Closing the Month" document may display a warning when calculating the depreciation of the company's assets.

Click on the triangle to read what the error is related to.

Go to the Fixed assets directory. Open the inventory card of the fixed asset specified in the error description.

The card details show overly accrued depreciation. Such an error occurs due to the chaotic closing of months.

Cancel the closing of the months from the moment of the error to the current period.

Close the periods in chronological order.

The error will be fixed.

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