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SmartFusion Modules > Accounting > Fixed Assets > Reports > Calculate Depreciation

Recent Changes: 
6.111 - Added sequence dropdown for either Account or Asset Group.
6.82 
  - Change to use Base Depreciation Amount to calculate depreciation instead of the acquisition cost. The Base Depreciation Amount is calculated based on the percentage reduction associated with the depreciation type the acquisition is tied to. ( For eg. If the acquisition cost is $100.00 and the percentage reduction on the depreciation type associated with the acquisition is 10% then the base depreciation amount is $90.00). If there is no depreciation type set on an acquisition the base depreciation amount is the same as the acquisition cost.

6.25 
  - Corrected logic to use service date instead of transfer date when service date acquisition is greater than transfer date.

Introduction

Fixed assets generally have a service life in which the value of the asset is determined by depreciation overtime.

Explanation

Select process - Select to Print, Update, or Update only.
Select sequence - Print by Account or Asset Group
Select output - Detail, Summary or Totals only.
Depreciation Date Range - Typically a user will want to base depreciation on the fiscal year start and end dates. Dates must be within the current fiscal year. The calculation uses these dates so be aware changing the reporting dates will effect the calculation.
Include all - Filtering options include:

Asset numbers

Asset groups

Asset class

Funds

Locations

Departments

Depreciation Calculation

SmartFusion provides two ways of calculating straight-line depreciation and this can be set in the fixed assets system file. A user may calculate depreciation based on the standard full year convention or the half year convention.

Depreciation is based on the service start date of the acquisition and the end date of the fiscal year. The value of the acquisition may differ if there exists a salvage value and if the acquisition a certain value has been disposed of. The total depreciation is rounded using mid point rounding.

Standard Full Method Calculation

daysLeftOver = Acquisition Service Start Date - End of Fiscal Year Date + 1 day;
totalDepreciation = daysLeftOver * ((acquisitionValue - salvageValue - existingDisposalValue) / (lifeInMonths / 12 months * 365 days))

Example A - New asset acquisition, first year prorated.

Acquisition Start Date = 5/4/2017
Start Fiscal Year Date = 7/1/2016
End Of Fiscal Year Date = 6/30/2017
Acquisition Amount = $3000.00
Salvage Value = $100.00
Life In Months = 60

daysLeftOver = 57 + 1 = 58
totalDepreciation = 58 * ((3000 - 100)) / (60 / 12 * 365) = 92.16438 = 92.16

Example B - Example A next year depreciation value.

Start Fiscal Year Date = 7/1/2017
End Of Fiscal Year Date = 6/30/2018

daysLeftOver = 364 + 1 = 365
totalDepreciation = 365 * ((3000 - 100)) / (60 / 12 * 365) = 580

Half Year Calculation

The Half Year Calculation convention is a way to ignore precise timing of acquisition service start and service end of life dates. Regardless of the month and day, the first and last depreciation year is prorated to half of the year's acquisition value. Typically this calculation is done twice a year, for the first half of the year and the second half of the year.

Note: A mathematical ceiling function is applied to the life in months to round up to the next whole year. This always rounds up to get a whole number for calculating half year or full year values. See example C.

Life in months = 40
40 / 12 = 3.333 => 4

Life in months = 120
120 / 12 = 10 => 10

Example A - New asset acquisition, first year.

Acquisition Start Date = 5/4/2017
Start Fiscal Year Date = 7/1/2016
End Of Fiscal Year Date = 6/30/2017
Acquisition Amount = $3000.00
Salvage Value = $100.00
Life In Months = 60

Half year convention uses half of a full year's worth of value
ceiling = 60 / 12 = 5 => 5. 
totalDepreciation = 365 * ((3000 - 100)) / (5 * 365) = 580 / 2 = 290

Example B - Example A next year depreciation value

First Half
Start Fiscal Year Date = 7/1/2017
End Of Fiscal Year Date = 1/30/2018

daysLeftOver = 181.5 + 1 = 182.5
totalDepreciation = 182.5 * ((3000 - 100)) / (5 * 365) = 290

Second Half
Start Fiscal Year Date = 2/1/2017
End Of Fiscal Year Date = 6/30/2018

daysLeftOver = 181.5 + 1 = 182.5
totalDepreciation = 182.5 * ((3000 - 100)) / (5 * 365) = 290

totalDepreciation = 290 + 290 = 580

Example C - Fractional life in months and full life breakdown

Acquisition Start Date = 5/4/2017
Start Fiscal Year Date = 7/1/2016
End Of Fiscal Year Date = 6/30/2017
Acquisition Amount = $20595
Salvage Value = $0.00
Life In Months = 52

ceiling = 52 / 12 = 4.333 => 5. 
fullYearTotalDepreciation = 365 * ((20595 - 0)) / (5 * 365) = 4119

Life In Months | Year | Value Depreciated
60 | 2017 | 2059.50
48 | 2018 | 4119.00
36 | 2019 | 4119.00
24 | 2020 | 4119.00
12 | 2021 | 4119.00
0  | 2022 | 2059.50

total value depreciated after 2022 = 20595

References

Depreciation Schedule

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