Calculating Depreciation
This topic covers how the depreciation rule within IRIS Financials is calculated.
Calculation
IRIS Financials uses the following formula to calculate depreciation:
Calculated Depreciation = (Asset Account at Cost / Useful life of the asset type) * number of periods to depreciate.
The system checks the current accumulated depreciation that has been posted on the asset account and subtracts this from the result of the Calculated Depreciation formula above.
The calculation will ignore any future depreciation past the period you have asked it to run up to. For example If you are running depreciation for period 11, it will ignore any accumulative depreciation that may already be in period 12 onwards, if you have already posted it in advance for year end. This may result in an asset being over depreciated.
These elements can be found in the following location:
Asset Account at Cost: This is found by doing an Account Enquiry on the relevant asset account. A posting should be present against the relevant 'At Cost' nominal
The depreciation rule does not use the amount in the Cost userfield on the asset account. It uses the transactions on the asset account to determine the cost.
Useful life of the asset: Go to Masters > Accounts > ASSETTYPE. Select the asset type linked to the asset and click on the User Field tab.
Number of periods to depreciate: Go to Masters > Accounts > ASSETTYPE. Select the asset type linked to the asset and click on the User Field tab.