Understanding Depreciation Methods
Planning and Budgeting enables you to use the following depreciation methods and calculates the per-period depreciation based on the following formulas:
|
Depreciation Method |
Formula |
|---|---|
|
Straight Line |
Net Book Value ÷ (Number of Periods in a Year × Life) |
|
Sum of the Years' Digits |
[(Remaining Years of Life ÷ Sum of Years Remaining) × Net Book Value] × Percent of Year to Depreciate |
|
Declining Balance |
(1 ÷ Life) × (Cost × Accumulated Depreciation ) ÷ (Number of Periods in a Year) |
|
Double Declining Balance |
(2 ÷ Life) × (Cost × Accumulated Depreciation ) ÷ (Number of Periods in a Year) |
Select from these depreciation methods using the Asset Data page when override is allowed.
A 'None' option is also available in the dropdown for the depreciation method when depreciation expense is not necessary or is not applied to an asset.