Understanding periodic depreciation and book value calculations

The system calculates depreciation expenses based on a depreciation period, a generic term that refers to an organization’s fiscal years or calendar month. Select to view depreciation expenses based on the depreciation period you prefer. See Viewing Depreciation Details.

To calculate an asset’s periodic depreciation expense and book value, the system must first calculate the daily depreciation expense of the asset. See Understanding Depreciation Methods and Daily Calculations.

The system must also calculate the number of days in the period before calculating an asset’s periodic depreciation expense or book value.

For most periods of an asset’s life, the number of days in the period equals the number of days in the calendar month or fiscal year defined for your organization, e.g., if you view depreciation expenses based on calendar month, the number of days in the period is 30 or 31. If you view depreciation expenses based on fiscal year and the fiscal year for your organization contains 365 days, the number of days in the period is 365.

The number of days falling in the first and last period of an asset’s life, however, usually does not equal a full 365, 30, or 31 days. The system calculates the number of days in the first period based on the following equation:

Number of Days in First Period = Number of Days Between Commission Date and Period End Date

The system calculates the number of days in the last period based on one of the following equations:

Number of Days in Last Period = Number of Days Between Period Start Date and Sold/Scrap Date

—Or—

Number of Days in Last Period = Number of Days Between Period Start Date and the Asset’s End of Life Date

Once the system calculates the number of days in each period, it can calculate the asset’s depreciation expense and book values. See the sections below for examples.