Depreciation methods and conventions

Članak
04/05/2024

This article provides an overview of the supported depreciation conventions and depreciation methods.

You can select various depreciation methods and conventions. The purpose of the methods is to allocate the depreciable value of the fixed asset into fiscal periods. The depreciable value of the fixed asset is the acquisition price, reduced by a scrap value, if any.

If you are using depreciation conventions and you modify the last depreciation run date for an asset, which then causes some depreciations to be skipped, the depreciation for the last year might be more than or less than is expected. The depreciation is adjusted by the number of depreciation periods affected by the modification of the last depreciation run date.

For example, if you are using the Half year depreciation convention over three years, depreciation ordinarily occurs over three-and-a-half years. If you change the last depreciation run date during the three-and-a-half years, the last year of depreciation moves out the number of periods affected. If you move the date by three months, the last year will have nine months’ worth of depreciation, when ordinarily there would be six months’ worth of depreciation.

You can select from the following depreciation conventions.