Srinivas,
The Fixed Asset Depreciation Method - Straight Line is outlined below.
Straight-Line Depreciation
When you use the straight-line method, you must specify one of the following options in the fixed asset depreciation book:
- The depreciation period (years or months) or a depreciation ending date
- A fixed yearly percentage
- A fixed yearly amount
- Depreciation period
Depreciation Period
If you enter the depreciation period (the number of depreciation years, the number of depreciation months, or the depreciation ending date), the following formula calculates the depreciation amount:
Depreciation Amount = ((Book value - Salvage Value) x Number of Depreciation Days) / Remaining Depreciation Days
Remaining depreciation days are calculated as the number of depreciation days minus the number of days between the depreciation starting date and the last fixed asset entry date.
Book value may be reduced by posted appreciation, write-down, custom 1 or custom 2 amounts, depending on whether the Include in Depr. Calculation field is deactivated and whether the Part of Book Value field is activated on the FA Posting Type Setup page. This calculation ensures that the fixed asset is fully depreciated at the depreciation ending date.
Fixed Yearly Percentage
If you enter a fixed yearly percentage, application uses the following formula to calculate the depreciation amount:
Depreciation Amount = (Straight-Line % x Depreciable Basis x Number of Depr. Days) / (100 x 360)
Fixed Yearly Amount
If you enter a fixed yearly amount, application uses this formula to calculate the depreciation amount:
Depreciation Amount = (Fixed Depreciation Amount x Number of Depreciation Days) / 360
Example - Straight-Line Depreciation
A fixed asset has an acquisition cost of LCY 100,000. The estimated life is eight years. The Calculate Depreciation batch job is run biannually.
For this example, the fixed asset ledger entry looks like this:
Hope this helps.
Thanks,
Steve