Knowledge

Depreciation is calculated using the straight-line depreciation method.

Assets are based on model to calculate depreciation

License is based on the depreciation selected when creating the license

Notes: 

• If the depreciation period (in months) > 0 and there is no EOL (applicable to licenses) or the EOL is the same as the purchase date (applicable to assets), depreciation will be calculated until the end of the depreciation period.
• If the depreciation period is greater than the EOL, depreciation will be calculated only until the EOL is reached.
• If the depreciation period is less than the EOL, depreciation will be calculated until the end of the depreciation period.
• If both the depreciation period and the EOL are equal to 0, no depreciation will be calculated.

Go to Depreciations menu under the Fixed Equipment module 

Example: Purchasing a Printer and Calculating Depreciation

A printer is purchased with the following details:

• Purchase Date: 5/1/2025

• Purchase Cost: $50,000,000 (including: Printer price = $45,000,000, Shipping cost = $2,000,000, Installation cost = $3,000,000).

• • Useful Life: 10 years (starting from the Purchase Date).

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  Step 1: Determine the Asset's Original Cost

  • Original Cost = Purchase Cost = $50,000,000.

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  Step 2: Calculate Annual Depreciation

  • Annual Depreciation = Original Cost / Useful Life
    ⇒ Annual Depreciation = $50,000,000 / 10 = $5,000,000/year.

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  Step 3: Calculate Monthly Depreciation

  • Monthly Depreciation = Annual Depreciation / 12 months
    ⇒ Monthly Depreciation = 5,000,000 / 12 = $416,667/month.

    
    

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  Remaining Depreciation

  • Remaining refers to the total depreciation amount accumulated over the months.

  • In this case, depreciation has been calculated up to the current time (3 months):
    ⇒ Remaining = 416,667 × 3 = $1,249,999.97 (if calculated manually, the result is $1,250,000. The difference is due to rounding rules).

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  Upgrading the Printer in March 2025

  • In March 2025, the company upgrades the printer with a total cost of $10,000,000 (this cost is entered in the Cost field when creating a Maintenance record).

    
    

  Recalculating Depreciation After Upgrade

  1. Accumulated Depreciation for January and February:

     • 416,667 × 2 = $833,333.31

  2. Remaining Book Value:

     • Remaining Book Value = (Original Cost + Upgrade Cost) - Accumulated Depreciation
       ⇒ Remaining Book Value = (50,000,000 + 10,000,000) - 833,333.31 = $59,166,666.69.

  3. Adjusted Useful Life:

     • Since 2 months have already been used, the remaining useful life is 9 years and 10 months (or 118 months).

  4. New Monthly Depreciation:

     • New Monthly Depreciation = (Remaining Book Value / Remaining Useful Life in Months)
       ⇒ New Monthly Depreciation = 59,166,666.69 / 118 = $501,412/month.

  • Depreciation for March 2025 is updated to $501,412.