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Assets / Enterprise Assets / Depreciation
Recalculate Equipment Depreciation Schedules
This action clears the records of the Equipment Depreciation table and generates new records for each depreciation log that is active in the Depreciation Logs table. The action then calculates depreciation costs for equipment assets that are not leased and that have values for the Install Date, Purchase Price, Property Type, and Salvage Value fields. After the action calculates depreciation, it presents the Equipment General Ledger Journal Entry report.
The action calculates depreciation for log dates that fall within the depreciation date range specified by the Install Date field of the Equipment table, the depreciation period of the Depreciation Property Types table, and the Closing Month field of the Depreciation Logs table. For example, if the Install Date is 1/1/15 and the depreciation period is 4 months, the action does not calculate depreciation for a depreciation log whose Closing Month is 6/30/15.
When equipment depreciation costs are calculated, a new record is inserted into eq_dep table. This value is also recorded in the Depreciation Value field (eq.cost_dep_value).
How the action calculates an asset's depreciation expenses depends on the depreciation method specified by the asset's depreciation property type.
Note: If you import data into the eq.cost_dep_value field, or manually enter this value, as long as the property type field is empty, this value will not be overwritten with the calculated depreciation value.
Straight-Line Depreciation
If the depreciation property type calls for using straight-line depreciation, the action uses the following calculations:
Depreciation Expense = (Cost Purchase - Salvage Value)/Depreciation Period for Property Type
Accumulated Depreciation = Depreciation Expense * Current Depreciation Period
Current Depreciation Period = Months between Closing Month and Date Received
Current Value = Cost Purchase - Accumulated Depreciation
Double-Declining Balance Depreciation
If the depreciation property type calls for using double-declining balance depreciation, the action uses the following calculations:
Depreciation Expense = (Cost Purchase - Total Depreciation from All Other Periods)*2/ Depreciation Period
If Cost Purchase - Total Depreciation from All Other Periods
- Depreciation Expense < Salvage Value, then,
Depreciation Expense = Cost Purchase - Total Depreciation from All Other
Periods - Salvage Value
Accumulated Depreciation = Total Depreciation from All Other Periods + Current Depreciation
Current Value = Cost Purchase - Accumulated Depreciation
Note: For the Double-Declining-Balance Depreciation method, using a depreciation period of over 20 months usually means that at the end of the depreciation period, the asset is not fully depreciated (that is, the current value of the asset will be greater than the salvage value). In general, the longer the depreciation period, the greater the difference between the current value and the salvage value will be at the end of the depreciation period.
Sum-of-Years Digits Depreciation
If the depreciation property type calls for using sum-of-years digits depreciation, the action uses the following calculations:
Depreciation Expense = (Cost Purchase - Salvage Value) * Remaining Useful Life
Remaining Useful Life = Number of Remaining Months of Life/Sum of the Digits Representing Depreciation Period
Accumulated Depreciation = Depreciation Expense + Total Depreciation from All Other Periods
Current Value = Cost Purchase - Accumulated Depreciation
Percentage Depreciation
If the depreciation property type calls for using percentage depreciation, the action uses the following calculations:
Current Depreciation = - (Cost Purchase * (Appreciation Percent / 100 ) ) / 12
Accumulated Depreciation = Months Between Date Received and Report * Current Depreciation
Current Value = Cost Purchase - Accumulated Depreciation
Note: The Tagged Furniture and the Equipment tables do not use the same fields
to represent an asset’s receipt date and an asset’s original cost; the
Tagged Furniture table uses Delivery Date and Purchase Price, and the Equipment
table uses Install Date and Purchase Price.
In order to use one set of calculations for depreciation
of all types of assets, AssetService.java (the Java code that calculates
depreciation) assigns these different fields to Date Received and Cost.Purchase. Accordingly, the above explanations of the calculations use
these terms rather than the actual field names of the Furniture or Equipment table. Advanced users can consult AssetService.java for more information.