---
title: "Depreciation Methods"
space: "ERPNext"
url: "https://docs.frappe.io/erpnext/depreciation-methods"
updated: "2026-02-26"
---

**Depreciation in ERPNext 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.

![](/files/Screenshot 2026-01-11 at 11.34.38 PM.png)

## 1. Depreciation Methods in ERPNext

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### 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.

![](/files/Screenshot%202024-10-17%20at%201.52.17%E2%80%AFAM.png)

### 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.

![](/files/Screenshot%202024-10-17%20at%201.54.17%E2%80%AFAM.png)

### 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**.

![](/files/Screenshot%202024-10-17%20at%201.41.48%E2%80%AFAM.png)

### 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

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- 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

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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

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- ERPNext displays the net value of the asset over different depreciation dates in a line chart for better visualization.

![](/files/Screenshot 2026-01-11 at 11.41.58 PM.png)

## 5. Related Topics

1. **[Asset Shift Allocation](https://docs.frappe.io/erpnext/user/manual/en/asset-shift-allocation)**
2. **[Asset Maintenance](https://docs.frappe.io/erpnext/user/manual/en/asset-maintenance)**