Calculate Depreciation

All fixed assets, with the exception of land, lose their capacity to yield services. Accordingly, the cost of these should be transferred to their related expense accounts in a  systematic manner during their expected useful life. This periodic expiration is called depreciation.

Straight Line Method Depreciation

Under the straight line method, the annual depreciation charge is calculated by allocating the amount to be depreciated equally over the number of years of estimated useful life.

Determine the adjusted  cost of the property, its salvage value, and its estimated useful life.  Subtract the salvage value, if there is any, from the adjusted cost.  The balance is the total depreciable amount.  Divide the balance by the number of years remaining in the useful life. This gives the amount of your yearly depreciation, Unless there is a big change in adjusted cost, or useful life, this amount will stay the same throughout the time of depreciation of the property, If, in the first year, the property is being used less than a full year, It must be prorated for the number of months in use.

                         Adjusted Cost - Salvage Value

                         -----------------------------------

                                    Useful Life

Adjusted Cost  can be the purchase price but there are events that often change the basis of the property, such as improvements, casualty losses.

Salvage value is the estimated value of property at the end of its useful life.

Useful Life  of a piece of property is an estimate of how long it can be used in trade or business, or to produce income.

Description of Information tab in the Calculate Depreciation form

1.The Depreciation Date field will automatically be filled in with today's date.  This can be changed to the date as to when the depreciation transaction was calculated or a different date if you would like.  Click the drop down button next to this field to open the miniature calendar form where you can graphically enter the date.  I

Whatever date is entered into the Date field will be the date the Depreciation transaction gets posted to the General Ledger when you Post the Depreciation.

2.The Category field allows you to select a category from the category combo box list.  Upon selecting a category on this field, all the fixed assets under the selected category will be displayed in the subform.  

3.In the Asset ID field, click the drop down button to select the fixed asset/s to be depreciated. Click the delete button before the selected Asset ID to remove it from the list of assets to be depreciated.

4.By enabling the Show Result checkbox, you will be able to see the Result of the depreciation process, whether the process is Successful or Failed.

5.The final step is to calculate the depreciation.  When Calculate button is clicked, a message will appear asking if you want to proceed on calculating for the depreciation.  If you select 'Yes', another message will appear stating that the fixed asset was successfully depreciated.