Running depreciation

What this does

Depreciation spreads an asset's cost over the years it's used. Ledger → Fixed Assets → Run Depreciation posts one month of it for every active asset at once; Reports → Depreciation Schedule shows the plan and the history per asset.

Before you start

accounting.manage. Every asset that should depreciate has a method, a useful life or recovery period, and its three accounts set. Run it once per month, after the month closes and before you report on it.

Steps

Run Depreciation. Pick the Month and Year (the period being depreciated), review the Assets list showing each asset's Cost and the amount it will post, and run. Total Amount is what hits expense. Depreciation History below lists prior runs by period.

Running the same period twice is safe: an asset already posted for that month is skipped.

Depreciation Schedule (on the reports page): every asset with Cost, Salvage, Method, Annual Depr, and Accum Depr, grouped by category with a Grand Total, filterable by category and status.

How it's built

For each active asset with a method other than none: basis = cost less salvage less Section 179. Straight-Line divides the basis evenly over the useful life. MACRS applies the IRS half-year-convention percentage for the asset's year (year 1 is the purchase year) to the basis, divided by twelve. Bonus depreciation is added in the first month of year one. An asset stops when accumulated depreciation reaches the basis or its recovery period ends. Each month posts one entry: Dr the asset's Depreciation Expense account / Cr its Accumulated Depreciation account.

Common problems

An asset is missing from the run. It's disposed or retired, has no method, has no accounts, is fully depreciated, or was bought after the period.

The amount is wrong for the first year. MACRS half-year convention gives a smaller first-year percentage by design. Section 179 and bonus reduce what's left to depreciate; check those fields.

I ran a month before the asset was added. Add the asset, then run that month again; only the new asset posts.

I need to undo a run. There's no reverse. Post a journal entry (Dr Accumulated Depreciation / Cr Depreciation Expense) for the amount, dated in the same period, with a memo saying which run it reverses.