Reconcile depreciation schedule items

Scheduled depreciation allows you to automate asset depreciation based on standard accounting methods:

• Straight Line: Spreads the depreciable base evenly across the selected period.

• Double Declining Balance: Accelerates depreciation by applying a higher rate in the earlier periods of an asset’s life.

• Half-Year: Applies a half-year of depreciation in the first and last year of the asset’s life, regardless of the acquisition or disposal date.

Understanding how different methods and timeframes affect depreciation is key. To help, we have provided practical examples showing how depreciation is calculated under various conditions.

You can add depreciation schedules in the Rollforward and Schedule tabs.

Add a depreciation schedule item

1. Open the Scheduled Depreciation task.

2. In the Schedule or Rollforward tab, click to add a schedule item. The Add Item form opens with the Depreciation method field pre-filled. See examples of Depreciation methods.

3. Enter the required details:

   • Name

   • Start and End Dates

   • Duration (calculated automatically from the dates)

   • Debited Account

   • Credited Account (pre-filled)

   • Starting Balance(the asset cost.)

   • Salvage Value (estimated worth of the item at the end of its useful life)

       Note:

     The system automatically calculates:

     • Monthly depreciation amount

     • Accumulated depreciation

     • Distribution across the schedule period

     • Depreciable base (asset cost minus salvage value)

4. Optionally, adjust depreciation amounts if needed, to ensure that they equal the depreciation base.

5. Save the schedule item.

Depreciation methods

Depreciation methods or depreciation schedule types are different ways to calculate how an asset's value decreases over time.

Straight Line (SL) depreciation

In the application, the Straight Line (SL) method spreads depreciation evenly over the asset’s useful life. This means the same amount is recorded each period until the asset reaches its salvage value.

How the application handles SL:

• The depreciation amount is calculated once, based on (Starting Balance – Salvage Value) ÷ Useful Life.

• The system applies this fixed amount each period.

• If an asset starts or ends in the middle of a month, the application uses proration to record only part of the depreciation for that period.

As with DDB, you do not need to calculate these amounts yourself. The system automatically applies the SL method — the examples are provided only to illustrate how results appear in schedules.

 

Double Declining Balance (DDB) depreciation

The Double Declining Balance (DDB) method is used to calculate depreciation by applying a higher rate in the early periods of an asset’s life. This means the system records larger depreciation amounts at the start and smaller amounts later on.

How the application handles DDB:

• Depreciation is recalculated each period based on the remaining book value of the asset.

• The system automatically checks the amount against the Straight Line (SL) method.

• If DDB becomes lower than Straight-Line, the system switches to SL so the asset is fully depreciated by the end of its useful life.

• If an asset starts or ends in the middle of a month, the application applies proration so that only part of the depreciation is recorded for that period.

    Note:  You do not need to calculate these amounts manually. The system performs the calculations automatically — the examples below are provided to help you understand how results are generated.

The following examples show how the system applies DDB in different situations: prorated periods, full periods, and transitions to Straight-Line.

Half-Year depreciation

The Half-Year method spreads depreciation by applying only half of the annual depreciation in the first and last year of an asset’s useful life. This creates a balanced approach, ensuring that assets purchased or disposed of during the year are fairly depreciated.

How the application handles Half-Year depreciation:

• The first year records 50% of the annual depreciation.

• Each full year after records the full annual depreciation amount.

• The final year again applies 50% of the annual depreciation to complete the schedule.

  Note:  The system calculates this automatically. The examples provided in this section are for understanding how the values appear in depreciation schedules.

Half-Year depreciation with Proration (3 years)

• Starting balance: $38,000

• Salvage Value: $2000

• Depreciable Base: $36,000

• Useful Life: 36 months (3 years)

• Start Date: April 19, 2025 (partial month)

• End Date: March 22, 2028 (partial month)

• Annual Depreciation = 36,000 ÷ 3 =12,000

  

How depreciation is applied:

1. First Month (Partial – April 2025):

   • Depreciation is prorated based on days in service.

   • Amount: $266.67

2. Remaining Months of First Year (May – Dec 2025):

   • Each full month records $716.67 depreciation.

   • Total for Year 1 (including April prorated): $6,000

3. Years 2 and 3 (Full Service Years):

   • Each year follows the half-year convention:

     • $12,000 ÷ 12 = $1,000 per month

   • So:

     • Year 2 (Jan–Dec 2026): $12,000 (1,000 × 12)

     • Year 3 (Jan–Dec 2027): $12,000 (1,000 × 12)

4. Final Year (Jan – Mar 2028, Partial Months):

   • Depreciation is prorated across the last months until end date.

   • Jan 2028: $2,290.33

   • Feb 2028: $2,290.33

   • Final Partial Month (March 2028): $1,419.35

   • Combined with prior years, accumulated depreciation reaches $36,000, reducing the balance to the $2,000 salvage value.

Depreciation methods - quick comparison

Method	How it works in the application	Special handling
Straight Line (SL)	Same depreciation amount each period, based on: starting balance - salvage ÷ useful life	Prorates first and last months if the asset does not cover a full period.
Double Declining Balance (DDB)	Accelerated depreciation: higher amounts at the start, smaller later. Switches to SL when DDB falls below SL.	System switches to SL automatically; prorates for partial months.
Half-Year	Records half of the annual depreciation in the first and last year; full depreciation in between.	Ensures fair allocation across first and last years.

The system automatically applies each method based on the schedule you set up — users do not need to calculate values manually. Examples are provided to show how results will appear in depreciation schedules

View results

• Schedule tab: Displays monthly distribution of depreciation from the start to end date.

• Roll Forward view: Includes additional details such as salvage value, acquisition cost, accumulated depreciation, depreciation, and net balance