The Calculate Depreciation function is used to calculate depreciation up to the specified Through Date for all Assets with Asset Types defined with Depreciation Classes having Depreciation Methods other than None.
Note: Depreciation Classes can be created to determine a specific Depreciation Method. The Depreciation Class is then assigned to Asset Types to calculate depreciation.
1.To access this function, from the Main screen, click Asset Management > Calculate Depreciation. The Calculate Depreciation screen appears.
2.Specify the Through Date through which you want depreciation to be calculated or just click OK to accept the default date. The default Through Date can be changed on the Options screen.
Depreciation Definitions and Examples:
Click on the depreciation type below to view a definition and example. Remember that these depreciation methods are selected on the Add/Edit Depreciation Class screen. Click here for more information on Adding/Editing Depreciation Classes.
•Straight Line - The simplest and most commonly used depreciation method, straight line depreciation is calculated by taking the purchase or acquisition price of an asset subtracted by the salvage value divided by the total productive years (Life) the asset can be reasonably expected to benefit the company.
•Double Declining Balance - The double declining balance depreciation method is similar to the straight-line method. To use it, the system first calculates depreciation as if it were the straight line method. Then it determines the total percentage of the asset that is depreciated the first year and doubles it. Each subsequent year, that same percentage is multiplied by the remaining balance to be depreciated. At some point, the value will be lower than the straight-line charge, at which point, the double declining method should be scrapped and straight line used for the remainder of the asset’s life. Remember that the IRS does allow businesses to switch depreciation methods one time in the life of an asset. Rosistem Assets will not make this switch for you. It is up to the individual business to keep track of when the switch to straight line depreciation should be made.
•150% Declining Balance - This method uses 150% of the straight-line percentage for the first year. The same percentage is then applied to the remaining balance, each succeeding year.
•Declining Balance Custom - This method allows you to enter a custom declining balance percentage. Declining Balance is a common depreciation-calculation system that involves applying the depreciation rate against the non-depreciated balance. Instead of spreading the cost of the asset evenly over its life, this system expenses the asset at a constant rate, which results in declining depreciation charges each successive period.
•Sum of the Years' Digits - To calculate depreciation charges using the sum of the years' digits method, take the expected life of an asset (in years) count back to one and add the figures together.
3.After depreciation for all applicable assets has been completed, e confirmation message will appear. Click the OK button to view the Asset Depreciation by Department Report or Cancel to close the screen.
This software does not track depreciation over multiple periods. For example, after calculating depreciation for an asset using the variables in the examples provided above, if you were to later change the Purchase Cost or Salvage Value or any other relevant variable, the next time you calculate depreciation the system would not take into account any previous calculations.
Any changes made to an existing Depreciation Class will impact depreciation calculations for every Asset defined with that Depreciation Class (via the Asset Type).