Depreciation

Depreciation is the process of allocating the cost of an asset over its useful life.

In ERPNext, depreciation is calculated for fixed assets to reflect their gradual reduction in value over time. The Depreciation module allows businesses to:

• Automate depreciation calculations based on predefined methods
• Maintain accurate accounting records for asset value reduction
• Track depreciation schedules for individual assets
• Integrate with Finance Books for multiple reporting requirements

For example, if you purchase a printer for $300 that is expected to be useful for three years, ERPNext can allocate $100 as depreciation expense each year instead of recording the full $300 in the first year.

1. Features

• Depreciation Methods: Straight Line, Written Down Value, Double Declining Balance, Manual
• Frequency & Schedule: Set how often depreciation is booked (monthly, quarterly, annually)
• Accounting Integration: Depreciation entries are posted automatically to ledger accounts
• Asset-wise Tracking: View depreciation per asset, including partially depreciated or fully depreciated assets
• Finance Books: Record depreciation differently for multiple reporting purposes

Note: Depreciation in ERPNext is linked directly to Assets. Before using this module, ensure that your Assets and Asset Categories are properly created.

2. Related Topics

• Assets
• Depreciation Methods