How Depreciation or Amortization Is Calculated When You Run Depreciation Processing

When you run Depreciation Processing in the Asset Management application, the depreciation or amortization calculation for each asset item is based on the information that is entered for the asset item in the Equipment Info Center.

You enter the depreciation and amortization information on the GL Cost, GL Book, and Additional Books tabs in the Equipment Info Center. This includes information such as the depreciation method, depreciation basis, in-service date, and useful life in years.

In the Acquisition Cost grid on the GL Cost tab, you add capitalization costs that make up the depreciation basis for calculating depreciation. Each cost in the grid has a period entered for it. The period determines when the cost will be applied to the depreciation calculation.

Example: You add a truck as an asset item in the Equipment Info Center, and the cost of the truck in the Acquisition Cost grid has a period of January 2016. In April 2016, you add a hitch to the Acquisition Cost grid for the truck with a period of April. The depreciation that is calculated prior to April does not include the hitch cost. Depreciation that is calculated after April includes the hitch cost.