Depreciation Formula
In the Fixed Assets Management SuiteApp, each depreciation method uses a formula to show how the monthly or annual depreciation is calculated.
The Depreciation Method page shows a list of available operators and constants that you can use:
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^ (to the power of, e.g., 5^2 = 5 squared)
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( ) * / +
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any number with decimals (e.g., 12345.67)
Note:When creating a custom depreciation formula, you cannot use a comma for decimal places (e.g., 12345,67).
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IF condition THEN value if true ELSE value if true ENDIF
comparison operators (<=, <, ==, !=, >, >=)
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~ (maximum of two values, e.g., 2~5 = 5)
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Original Asset Cost (OC) – The original cost of the asset or purchase price.
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Current Asset Cost (CC) – The current asset cost is typically the same as the original cost, but provides an additional cost value to track changes when the cost differs. Write downs affect this value.
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Net Book Value (NB) – The current depreciated value of the asset.
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Residual Value (RV) – The lowest value the asset is reduced to. This is usually zero, unless you set a residual value for the asset.
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Asset Lifetime (AL) – The number of periods an asset is depreciated for (asset effective life for tax).
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Current Period or Age (CP) – The current age of the asset.
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Total Depreciation Amount (TD) – The total amount of depreciation applied to the asset.
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Current Usage (CU) – The current recorded usage of the asset.
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Lifetime Usage (LU) – The total usage lifetime configured against the asset.
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Last Depreciation Amount (LD) – The last depreciation amount.
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Days held in current period (DH) – The number of days between the asset acquisition date or start of the current period (whichever is later) and the disposal date or the end of the current period (whichever is earlier).
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Prior year net book value (PB) – The closing net book value at the end of the last financial year, as stored on the asset record. The Financial Year Start field sets the start and end of the year for the method. The Prior Year NBV updates when the month being depreciated matches the Financial Year Start month. This captures the NBV value as it was for the financial year that ended.
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Depreciation Period (DP) — The number of days in a period.
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Fiscal Year (FY) — The number of days in a fiscal year.
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R1..Rn — A placeholder for values used in the depreciation rate table.
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ROUND — If the asset’s currency is Japanese Yen, this function rounds values based on the rounding preference specified in the FAM System Setup page. Otherwise, it rounds values based on the asset’s currency precision.
Formula Example: Straight Line Depreciation
Straight line depreciation formula:
(CC-RV)/AL
(Current Asset Cost – Residual Value) / Asset Lifetime
Example:
Current Asset Cost: 20,000
Residual Value: 2,000
Asset Lifetime: 60 months
(20,000 – 2,000) / 60 = 300
As it is a straight line depreciation this will be the same depreciation amount every month.
Formula Example: Maximum of Two Values
The formula can perform two separate depreciation calculations, and then apply the one that results in the higher depreciation amount. To use this functionality, separate the two formulas by the ~ character.
For example, the formula for the 150DB method is:
((NB-RV)*(1.5/AL))~((NB-RV)/(AL-CP+1))
Fixed Assets Management calculates the results of both expressions individually and then uses the higher amount for the depreciation. In this case, the first formula returns the highest value for the first part of the asset's life before switching to the second.
Month 1
Net book value: 20,000
Residual value: 2,000
Asset lifetime: 60 (5 years)
Current period: 1
((20,000 – 2,000)*(1.5/60)) = 450
((20,000 – 2,000)/(60 – 1 + 1)) = 300
Therefore the first formula (450) is used.
Month 30
Net book value: 10,409
Residual value: 2,000
Asset lifetime: 60 (5 years)
Current period: 30
((10,409 – 2,000)*(1.5/60)) = 210
((10,409 – 2,000)/(60 – 30 + 1)) = 271
Now the second formula (271) is used, and that same amount applies for the rest of the asset's life because the second is a straight line depreciation method. In this example, the formula switches a third of the way through, around period 20.
Formula Example: Diminishing Value Method for Tax
You can create a diminishing value method to calculate tax depreciation using a reduced rate in the initial period (year of acquisition). For example:
Formula: (NB)*(DH/365)*(200/(AL/12)/100)
Depreciation Period: Monthly
Net book value is the depreciated value for tax purposes at the end of the prior period. The Prior Year Net Book Value is the depreciated value for tax purposes at the end of the prior year.