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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / Depreciation on Fixed ...
Finance | Project Operations, Human Resources, ...
Answered

Depreciation on Fixed assets

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Posted on by CU25060556-0 20
how can we charge depreciation on a fixed asset for 1st 6 months @10% and next 6 months @5%?
In d365 F&O
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Dynamics 365 Finance
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  • CU30071008-2 Profile Picture
    CU30071008-2 2 on at
    Hello,
    To apply split depreciation rates, calculate 10% annual depreciation prorated for the first 6 months, then 5% annual for the next 6. Use a monthly or daily basis to apportion accurately, ensuring compliance with your accounting policy or Companies Act guidelines. 

    Best Regards,
    Thomas Henry
  • Verified answer
    Abhilash Warrier Profile Picture
    Abhilash Warrier 5,402 Super User 2025 Season 2 on at
    Hi,

    Additional depreciation can be used strategically to simulate variable depreciation rates—like your case of 10% for the first 6 months and 5% for the next 6 months—by applying extra depreciation amounts at specific intervals.

    What is Additional Depreciation?
    Additional depreciation is an extra amount depreciated on top of the regular depreciation. It can be used for:
    • Accelerated depreciation
    • Tax adjustments
    • Special accounting treatments
    How to Leverage It for Your Scenario
    Goal:
    Apply 10% depreciation for the first 6 months, then 5% for the next 6 months.
    Steps:
    1. Set up a standard depreciation profile:
      • Use a straight-line or reducing balance method with a base rate (e.g., 5%).
    2. Enable Additional Depreciation:
      • Go to Fixed Assets > Setup > Depreciation profiles.
      • Select your profile and enable Additional depreciation.
    3. Create an Additional Depreciation Profile:
      • Define a custom depreciation amount or percentage.
      • Set it to apply only for the first 6 months.
      • This will simulate the extra 5% needed to reach 10%.
    4. Assign the Additional Depreciation Profile:
      • Go to the asset book.
      • Under the Depreciation tab, assign the additional depreciation profile.
    5. Schedule the Additional Depreciation:
      • Use the "Depreciation periods" or "Depreciation conventions" to limit the additional depreciation to the first 6 months.
      • After 6 months, the system will continue with the base 5% rate.
     Example
    Period Base Depreciation Additional Depreciation Total
    Jan–Jun 5% 5% 10%
    Jul–Dec 5% 0% 5%

    If this helped, please mark it as "Verified" for others facing the same issue.
    Keep in mind that it is possible to mark more than one answer as verified.
     

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