Asset Depreciation Methods

The Asset Management application lets you define the types of depreciation methods that are required for managing your enterprise's assets. It defaults to using the straight-line method, but you can add other methods and their respective calculations as needed.

Configure the types of depreciation on the Methods tab in Settings > Accounting > Asset Management. Determine how the costs of assets are distributed, either based on time or use and using a regular or accelerated rate.

If you track multiple companies in Deltek, you must run depreciation processing separately for each company. Depreciation only applies to assets that belong to the active company.

Refer to the following examples for calculating depreciation with fixed assets:

• Straight-line: Use this method to calculate depreciation based on the cost of the asset being reduced by an equal amount in each accounting period. This occurs over the asset's useful life. Straight-line depreciation is frequently used when the asset's usability remains static regardless of its age.

  For example, if an asset's value is $20,000.00, the useful life is 4 years, and the expected value at the end is $5000, the depreciation is $3,750. This is calculated as follows:

  Criteria	Calculation
  Asset's value	$20,000
  Useful life	4 years
  Expected value at end of cycle	$5,000
  Depreciable amount = $15,000	$20,000 - $5,000
  Yearly depreciation = $3750	$15,000 / 4

• Sum of the years' digits: Use this accelerated depreciation method when assuming that the asset is more productive when it is new. In other words, the depreciation is greater in the earlier years of the asset's useful life and less in the later years. However, the total amount of depreciation over the asset's useful life does not change.

  Sum of years' digits uses the following calculation for depreciation: Depreciable base x (Remaining useful life / Sum of years digits).

  For example, a piece of equipment is purchased for $160,000, the useful life is 5 years, and the expected valued at the end is $10,000. Because the equipment will be sold at the end of five years for $10,000, the total depreciable cost is $150,000.

  The digits of the years are summed. 1 + 2 + 3 + 4 + 5 = 15. The sum of the years is then used in the calculation as follows:

  Year	Depreciation Amount per Year
  1	5/15 of $150,000 = $50,000
  2	4/15 of $150,000 = $40,000
  3	3/15 of $150,000 = $30,000
  4	2/15 of $150,000 = $20,000
  5	1/15 of $150,000 = $10,000
  Sum	$150,000