Depreciation

Depreciation is the practice of allocating the cost of an asset over its useful life. This reduces the assets' value on the organization's balance sheet each year for financial reporting.

The Depreciation feature enables you to track the depreciation for assets. It supports multiple depreciation methods and enables automatic calculation of depreciation values based on asset data. It can be used for quick estimates or as a saved calculation within asset records when the required fields are populated.

You can configure whether the depreciation is summarized in monthly, quarterly, or yearly totals, and whether mid-cycle adjustments are allowed.

For more information on this feature, contact [e-mail].

Depreciation types

The following depreciation methods are supported:

• Straight-Line: The simplest method of calculating the depreciation expense. When enabled, the depreciation expense for the asset is applied evenly across the useful life of the asset.

• Units of Production: Depreciates assets based on the number of hours they are used or the number of units produced by using the asset over its useful life. This method is useful for organizations whose asset output fluctuates due to demand.

• Sum of Years: Depreciates assets earlier in life, but less aggressively than the Declining balance method. Annual depreciation is based on the number of years of the asset's useful life.

• Declining Balance: Depreciates assets earlier in life rather than evenly over their useful life. This method is more aggressive than the Sum of Years method.

• Double Declining Balance: Applies a larger expense amount in the earlier years than in the later years of an asset’s useful life. This method is more aggressive than the Declining Balance and Sum of Years methods.

There are no prerequisites for using the basic version of depreciation, which allows entering values directly to estimate results.

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Depreciation fields

When Depreciation is enabled for a collection, the following fields are added automatically to enable you to save depreciation values to records and enable automated calculations.

Field Name	Field Type	Description
Depreciation type	Single select list	Method applied to calculate the depreciation of the asset
Asset cost	Currency	Price originally paid for the asset
Date placed in service	Date & Time	Date the asset began its use and began deteriorating. This date determines the start of the depreciation table. You can only edit the Date placed in service if the month is in the future or no depreciation rows have been posted. When the specified month is reached, the field is locked from edits to prevent historical data corruption.
Salvage value	Currency	Value of the asset at its end of life. This value must be lower than the Asset cost.
Useful life (months)	Numeric (0 decimals)	Number of months from the Date placed in service until the asset reaches its end of life
Current month (read-only)	Text	Current month
Current book value (read-only)	Currency	Current calculated value for the asset, including any previous depreciation over time
Depreciation expense (read-only)	Currency	Calculated monthly reduction in the depreciated asset's value based on the selected Depreciation type
Accumulated depreciation (read-only)	Currency	Total amount of depreciation assumed for the asset from its Date placed in service
Annual Rate	Numeric (Percentage)	Annual rate of depreciation estimated for the asset. The value will be converted to monthly values for calculations. This value is used when using the Declining balance depreciation type.
Total Estimated Units	Numeric	Estimated number of units that will be produced by the asset over its useful life
Units Produced	Numeric	Number of units produced to date by the asset

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Enable and manage Depreciation

You enable depreciation at the collection level. You can then specify the depreciation data for assets in the collection.

1. In the navigation pane, select Settings > Account Management.

2. Expand the appropriate account and module, and then click Manage in the Collections tile. The list of collections is displayed.

3. Select Depreciation. The Depreciation fields are added to the collection.

4. Click Manage > Manage Depreciation.

5. Select whether you want to summarize depreciation values on a Monthly, Quarterly, or Yearly bases.

6. For the selected selected Depreciation calculation frequency, select whether you want to start the depreciation calculation based on the Calendar start (January-December) or whether you want to apply it based on the Fiscal start. If you selected the Fiscal start type, the fiscal periods are listed for review.

7. To allow mid-cycle adjustments to be applied to assets, select Yes under Allow mid-cycle adjustments.

8. Click Save.

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Configure depreciation for assets

1. Click and then select the collection for which you want to update depreciation information.

2. To specify depreciation data manually:

   1. Select the asset for which you want to apply depreciation. The asset details pane is displayed.

   2. Specify the following Depreciation fields:

      • Depreciation type

      • Asset cost

      • Date placed in service

      • Salvage value

      • Useful life (months)

      • Annual Rate (used with the Declining balance method)

      • Total Estimated Units (used with the Declining balance method)

      • Units Produced (used with the Declining balance method)

   3. Click Save. The asset's depreciation is calculated automatically.

   4. Repeat steps a-c for each asset.

You can also import depreciation data from a spreadsheet to update multiple assets in a single process. See Import.

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View depreciation information

After you enable Depreciation and enter values in the Depreciation fields for assets, you can view the depreciation schedule for the asset.

1. Click and then select the collection for which you want to review depreciation information.

2. Select the asset for which you want to review depreciation. The asset details pane is displayed.

3. Click View full details. The asset's details page is displayed.

4. Select the Depreciation tab. The table of depreciation for the asset is displayed.

The Depreciation tab is displayed only if depreciation data exists for the asset.

1. To view the data in chart form, click Chart above the table.

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Edit the depreciation type

You change the depreciation type used to calculate the depreciation values for the selected asset.

1. Click and then select the collection for which you want to review depreciation information.

2. Select the asset for which you want to edit the depreciation details. The asset details pane is displayed.

3. For Depreciation type, select the appropriate type. Adjust the remaining Depreciation fields as needed.

4. Click Save. The Change depreciation type? window is displayed.

5. Select an option to specify how to apply the change:

   • To apply the change in depreciation for the current month onward, select Apply from current month onward and then click Apply change.

   • To recalculate the entire schedule form the Date placed in service date, select Recalculate entire schedule from the start and then click Recalculate from start.

• If you recalculate the entire schedule, there is no way to reverse the changes. You should export the depreciation table before completing this step to avoid losing the historical data.

• If you change the depreciation type and edit the Useful life, Salvage value, or Asset cost fields at the same time, the system automatically runs a full recalculation from the start to ensure all values align correctly.

• Units of Production notes:

  • If you are editing to or from the Units for Production depreciation type, you must select Recalculate entire schedule from the start. You cannot select Apply from current month onward.

  • If you move away from the Units of Production depreciation type, the Units Produced and Total Estimated Units data is permanently removed.

  • If you move away from the Units of Production depreciation type, the Depreciation fields specific to the depreciation type remain visible in the collection.

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Schedule a mid-cycle adjustment

Mid-cycle adjustments are supported for the Straight Line, Declining Balance, Double Declining Balance, and Sum of Years depreciation types. They are not supported for the Units of Production.

A mid-cycle adjustment is a change made to an asset's cost, salvage value, or useful life after it has already started depreciating. This change creates a break in the schedule where new values apply from that point forward.

You can use mid-cycle adjustments to reflect financial changes without losing your historical data. This supports scenarios where assets are upgraded, retired early, or have other changes in estimated life.

Create a mid-cycle adjustment

1. Click and then select the collection for which you want to review depreciation information.

2. Select the asset for which you want to apply a mid-cycle adjustment. The asset details pane is displayed.

3. Click Adjust depreciation and then select Mid-cycle adjustment. The Mid-cycle Adjustment window is displayed.

4. Select the Mid-cycle adjustment start date from which the updated depreciation should be applied.

• The start date must be after the Date placed in service and after any previous adjustment dates.

• The adjustment will start on the first day of the selected time period, regardless of the date selected.

1. Update the Useful life, Salvage value, or Asset cost of the asset.

2. Click Save adjustment. The system recalculates the future rows in the depreciation table.

After you save a future adjustment, the Useful life, Salvage value, or Asset cost fields can no longer be edited through the interface, APIs, or automations. You must edit the mid-cycle adjustment to edit these values.

Carry-Forward calculation

When a mid-cycle adjustment is applied, instead of restarting from day one, the system takes the Remaining Book Value of the asset at the time of the adjustment and then depreciates it over the Remaining Useful Life.

Depreciation table

If an asset's value reaches $0.00 (common in with the Double Declining Balance type), a mid-cycle adjustment applied to the $0 periods may not display a label in the depreciation table, though the calculation remains accurate.

If your table only shows a limited range (for example, 24 months), look for an inline message at the bottom of the table that indicates when a scheduled adjustment is set to begin.

Edit a mid-cycle adjustment

You can only edit the latest (last) mid-cycle adjustment.

1. Click and then select the collection for which you want to review depreciation information.

2. Select the asset for which you want to edit a mid-cycle adjustment. The asset details pane is displayed.

3. Click Adjust depreciation and then select Edit mid-cycle adjustment. The Edit mid-cycle adjustment window is displayed.

4. Select the Mid-cycle adjustment start date from which the updated depreciation should be applied.

   • The start date must be after the Date placed in service and after any previous adjustment dates.

   • The adjustment will start on the first day of the selected start period, regardless of the date selected.

5. Update the Useful life, Salvage value, or Asset cost of the asset.

6. Click Save adjustment. The system recalculates the future rows in the depreciation table.

Cancel a mid-cycle adjustment

You can cancel all adjustments that are set to begin in a future month.

1. Click and then select the collection for which you want to review depreciation information.

2. Select the asset for which you want to cancel future mid-cycle adjustments. The asset details pane is displayed.

3. Click Adjust depreciation and then select Cancel mid-cycle adjustment. A confirmation message is displayed.

4. Click Confirm. All pending adjustments in the future are removed and the full depreciation schedule is recalculated.

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Stop Depreciation

If an asset is retired, sold, or no longer in use before its useful life ends, you can stop calculating the depreciation for the asset. You can stop the depreciation in the current month or select a future month to schedule the stop action.

• You cannot stop calculating depreciation for an asset that has reached its Depreciation stop date.

• When depreciation is stopped, you can no longer edit the Depreciation fields for the record.

1. Click and then select the collection for which you want to review depreciation information.

2. Select the asset for which you want to stop calculating depreciation. The asset details pane is displayed.

3. Click Adjust depreciation and then select Stop Depreciation. The Stop depreciation window is displayed.

4. Enter the Depreciation stop date.

• The Depreciation stop date must be after any existing mid-cycle adjustments.

• The stop will be applied at the end of the selected month, regardless of the date selected.

• If you specify a date in a future month, you can cancel the depreciation stop prior to the selected stop month.

1. Click Save adjustment. The depreciation table will end at the selected stop month. The Current book value and and Current accumulated depreciation will remain constant from that date forward.