Asset Depreciation

Asset Depreciation is the systematic allocation of an asset's cost over its useful life. YousrERP automatically calculates and books depreciation based on the settings defined in the Asset Category.

How Depreciation Works

1. An asset is created and capitalized with its purchase cost.
2. The depreciation schedule is auto-generated based on:

- Depreciation Method (Straight Line, Declining Balance, etc.)

- Total Number of Depreciations (useful life)

- Frequency (monthly, quarterly, yearly)

- Expected Salvage Value (residual value at end of life)

1. Each period, depreciation is calculated and a Journal Entry is created.

Depreciation Schedule

To view the schedule:

1. Open an Asset record.
2. Go to the Depreciation Schedule section.
3. View each period's:

- Opening Value

- Depreciation Amount

- Closing Value

- Accumulated Depreciation

Booking Depreciation

Automatic (Recommended)

1. Go to Accounting > Settings and enable Book Asset Depreciation Entry Automatically.
2. Depreciation entries are auto-created on schedule.

Manual

1. Go to Asset > Asset Depreciation.
2. Select the Company and Posting Date.
3. The system shows assets due for depreciation.
4. Click Create Journal Entry.
5. Review and Submit.

Accounting Entry

For each depreciation booking:

• Debit: Depreciation Expense Account (P&L)
• Credit: Accumulated Depreciation Account (Balance Sheet)

Asset Disposal

When an asset is sold, scrapped, or disposed:

1. The remaining book value is calculated.
2. If sold, any gain or loss is posted:

- Gain: Selling price > Book value → Gain on Disposal (Income)

- Loss: Selling price < Book value → Loss on Disposal (Expense)

1. The asset and its accumulated depreciation are removed from the books.

Related Topics

• Asset Category
• Asset Capitalization
• Company Setup