Depreciation can be posted for one asset, all assets in an asset type, or for all assets. Depreciation comes in two forms: straight-line or diminishing value. Depreciation can also occur in annual or monthly frequencies. To determine the depreciation, the system looks at the asset type to find the method and the depreciation percentage. The system also factors in the asset cost, accumulated depreciation, the life of the asset and the installation date.
The depreciation starts from the first month after the asset is installed. For example, if the asset is installed on November 15th, the depreciation will begin on December 1st. The first period's depreciation will be applied on a prorated basis, whereas the depreciation expense will depend on how far through the period the asset was installed. In the above example, the first period's depreciation will be approximately half the monthly depreciation, since it was installed halfway through the month. Depreciation is always posted for the last day of the period.
Depreciation expenses are first created as unposted transactions to allow you a mechanism for reviewing and deleting entries. If an asset has been created retrospectively, the depreciation will also be calculated retrospectively for all periods from the install date.
