Depreciation in ERP Enigma is the systematic allocation of an asset’s cost over its useful life.
The system automatically generates a depreciation schedule based on the Depreciation Method, Total Number of Depreciations, and other inputs such as the Available-for-Use Date in the Asset record. Multiple schedules can also be created for different Finance Books.
Note: > To generate a depreciation schedule automatically, ensure that > ‘Calculate Depreciation’ > is enabled while creating the asset. >
1. Depreciation Methods in ERP Enigma
1.1 Straight Line
- The asset value is reduced uniformly over its useful life until it reaches its salvage value.
- Useful when depreciation occurs evenly over time.
Example: If an asset costs 1,000 and its salvage value is 500 after 5 years, depreciation would be 100 per year.
Additional Options:
- Depreciate based on daily pro-rata: Adjust depreciation based on the number of days in a month.
- Depreciate based on shifts: Adjust depreciation based on asset usage per shift. Define shift factors in Asset Shift Factor and allocate them using Asset Shift Allocation.
1.2 Double Declining Balance
- Also called 200% declining balance .
- Depreciates faster in the initial years and slows down later.
Example: If an asset costs 100,000 and its salvage value is 11,000 after 8 years, depreciation in early years will be higher than in later years.
1.3 Written Down Value (WDV)
- Depreciation is applied to the current written down value of the asset each period.
- Useful for assets that lose more value in the initial years.
Example: If an asset costs 1,000 with a depreciation rate of 40% over 5 years, each year the depreciation is 40% of the remaining value .
1.4 Manual
- The system generates a default schedule based on asset details.
- You can edit dates and depreciation amounts manually for any period as needed.
2. Automatic Depreciation Entries
- Enable automatic depreciation in Accounts Settings to post entries automatically on scheduled dates.
- Otherwise, create entries manually using the Make Depreciation Entry button in the Depreciation Schedule row.
The related accounts can be set in the Asset Category or Company .
3. Accounting Entries on Depreciation
When depreciation is posted:
- Accumulated Depreciation Account is credited
- Depreciation Expense Account is debited
The related accounts are defined in the > Asset Category > or > Company > master. >
4. Asset Value Chart
- ERP Enigma displays the net value of the asset over different depreciation dates in a line chart for better visualization.
5. Related Topics
- Asset Shift Allocation
- Asset Maintenance