Tracking asset depreciation

Depreciation enables you to calculate equipment depreciation expense, which is the value of the wear and deterioration of a piece of equipment based on an accounting period and the useful life of the piece of equipment.

Note: The system does not roll up depreciation costs within an equipment hierarchy. Maintain individual depreciation records for all assets, positions, or systems for which you need to maintain depreciation data.

The system provides four depreciation methods for your equipment. See Understanding depreciation methods and daily calculations

Create depreciation types based on the agency to which the depreciation data must be reported, e.g., create depreciation types for generally accepted accounting practices (GAAP) and/or a local, federal, state, or international government agency.

Note: Depreciation types are linked to the DETP entity for which you must define your depreciation type codes. Contact your system administrator for more information.

For all depreciation methods and types, the system can calculate depreciation data based on months or fiscal years of the asset’s organization. The system begins calculating the depreciation of a piece of equipment on its Commission Date and continues calculating the equipment’s depreciation until the piece of equipment reaches its Sold/Scrap Date or its end of life date.

Note: The system calculates an asset's end of life date based on the following equation:

End of Life Date = Commission Date + (Est. Useful Life – 1 day)

Specify the Commission Date and Sold/Scrap Date on the Assets, Positions, or Systems form. See Defining assets, Defining positions, or Defining systems earlier in this chapter for more information. Specify the Est. Useful Lifeon the Depreciation page of the Assets form. Refer to Entering depreciation data.

Base depreciation calculations on an estimated useful life of days, weeks, months, quarters, or years. Regardless of the unit of measure you select, the system calculates a daily depreciation expense upon which all depreciation and book value calculations are based. The system calculates the annual depreciation expense based on the depreciation method you select, and then calculates a daily depreciation expense. See Understanding depreciation methods and daily calculations.

Once the system calculates a piece of equipment’s daily depreciation expense, it can calculate periodic depreciation expenses and book values. See Understanding periodic depreciation and book value calculations.