Understanding depreciation methods and daily calculations

Not all calendar years consist of 365 days, e.g., leap years consist of 366 days. Therefore, the system must calculate a daily depreciation expense upon which periodic depreciation expense and book values are calculated.

The system calculates the annual depreciation rate based on the depreciation method you select, and then calculates the daily depreciation rate based on the following equation:

Daily Depreciation Rate = Annual Depreciation Rate / Number of Days in the Year

Specify the depreciation method that the system should use to calculate the annual depreciation expense on the Depreciation page of the Assets, Positions, or Systems form. See Entering Depreciation Data for more information. The system provides four asset depreciation methods: Straight Line, Sum of Years Digits, Double Declining Balance, and Units of Output.

Note: The ASDEPTYP installation parameter determines the default depreciation method for the system; however, you can also set the depreciation method on the organization or equipment level. Setting the depreciation method at the organization level supersedes the setting of the ASDEPTYP installation parameter. Setting the depreciation method at the equipment level supersedes the setting of ASDEPTYP and/or the depreciation method specified for the organization.