Entering asset depreciation

The Asset Depreciation dialogue box enables you to display and print a depreciation schedule for your capital assets.

Note: Before using the asset depreciation tool, make sure that you’ve entered the Asset Life (In Years), Salvage Value and Depreciation Rate for each capital asset. The program uses these values to calculate depreciation. If these values are wrong or missing, the results will be wrong.

To enter asset depreciation:

1. Select Asset Depreciation from the Management menu. The Asset Depreciation dialogue box opens.
2. Select the assets you want to include in the depreciation schedule:

All - All capital assets are included.

CCA class - Only capital assets in one CCA class are included.

Note: You must select a CCA Class from the drop-down menu.

Capital asset - Only one capital asset is included.

Note: Click Select and choose the asset you want to include. 

3. Select a Depreciation type from the drop-down menu:

Management Depreciation Rate - This calculates depreciation based on the rate entered in the Depreciation Rate field for each capital asset.

Straight Line – This calculates depreciation by subtracting the salvage value from the asset’s original cost, and dividing the result by the asset’s useful life.

Declining Balance – This applies a constant rate of depreciation to the asset each year, afterdeducting the previous year’s depreciation, until the asset’s value is reduced to the salvage value atthe end of its useful life. For example, if an asset costs $1,000 and depreciates at a constant rate of 10 per cent, it would deduct $100.00 in the first year, $90.00 in the second year, and so on.

Double Declining Balance - This accelerated method, calculates depreciation by applying a rate of two times the straight line method to the declining balance. When the remaining amount to be depreciated is less than the straight-line method, it reverts to the straight-line method.

Sum-of-Years Digits - This accelerated method calculates depreciation by subtracting the salvage value from the asset’s original cost and then multiplying the result by a fractional rate of depreciation.

Note: The fractional rate’s denominator stays constant from year to year. It’s the sum of the asset’s useful life years. The numerator changes each year. It’s the number of useful years the asset has left. For example, if an asset has a useful life of five years, the denominator is 15, or (1+2+3+4+5). The numerator is 5 in the first year, 4 in the second year, and so on. 

4. Click Calculate. The depreciation schedule for the selected assets appears.
5. To print the depreciation schedule:

Select the Initial year. The report shows six consecutive years of information, starting with the year you select.

Click Print Preview to display the Asset Depreciation report. 

Last updated on August 22, 2014 by FCC AgExpert