Depreciation enables you to calculate equipment depreciation expense, which is the value of the wear and deterioration of a piece of equipment based on an accounting period and the useful life of the piece of equipment.
Depreciation costs do not roll up within an equipment hierarchy. Maintain individual
depreciation records for all assets, positions, or systems for which you need to maintain
depreciation data.
There are four depreciation methods available for your equipment.
Create depreciation types based on the agency to which the depreciation data must be reported. For example, create depreciation types for generally accepted accounting practices (GAAP) and/or a local, federal, state, or international government agency.
Depreciation types are linked to the DETP entity for which you must define your depreciation
type codes. Contact your system administrator for more information.
For all depreciation methods and types, depreciation data can be calculated based on months or fiscal years of the asset’s organization. The process begins with calculating the depreciation of a piece of equipment on its Commission Date and continues calculating the equipment’s depreciation until the piece of equipment reaches its Sold/Scrap Date or its end of life date.
An asset's end of life date is calculated based on the following equation:
End of Life Date = Commission Date + (Est. Useful Life – 1 day)
Specify the Commission Date and Sold/Scrap Date on the Assets, Positions, or Systems form.
Specify the Est. Useful Life on the Depreciation page of the Assets form.
See Entering depreciation data.
Base depreciation calculations on an estimated useful life of days, weeks, months, quarters, or years. Regardless of the unit of measure you select, a daily depreciation expense upon which all depreciation and book value calculations are based is calculated. The annual depreciation expense is calculated based on the depreciation method you select, and then a daily depreciation expense is calculated.
See Understanding depreciation methods and daily calculations.
Once a piece of equipment’s daily depreciation expense is calculated, periodic depreciation expenses and book values can be calculated.
See Understanding periodic depreciation and book value calculations.