In order to better understand when to replace an asset, it's helpful to have additional information about its depreciation. This information can be used to predict the asset's future estimated value, which allows for a comparison against current expenses for parts and labor used to repair and maintain the asset.
On the Asset Details page, there is a Depreciation Information section. To edit these data fields, select the Options dropdown and then Edit Asset.
Please note that you must have the proper permissions to edit assets.
When you create, import, or edit an asset, you can make the following asset depreciation fields mandatory:
Replacement Cost
Salvage Value
Expected Lifetime (in years)
For more information about required fields, please refer to the following guide:
Calculation of Asset Depreciation
This section details the internal system logic for calculating asset depreciation, providing clarity on required inputs, formulas, rounding, and special adjustments.
1. Overview and Purpose
Function: Enables the users to calculate Annual Depreciation for an asset, which is used for reporting to stakeholders and making asset replacement decisions.
Calculation Basis: The system calculates internally on a monthly basis.
Application Timing: Depreciation Expense is applied on the last day of the period.
Depreciation Periods: Yearly periods are set to 12 [Depreciation Periods Per Year].
2. Required Data Fields
An Asset must have the following three fields entered to calculate depreciation:
Purchase Date
Purchase Price (Initial Cost)
Salvage Value
Note: Depreciation will still be calculated even if the Salvage Value is $0 or has not been populated by the user.
3. Core Depreciation Formula and Rounding
The calculation uses the straight-line method applied monthly, with specific rounding rules:
Monthly Depreciation Formula:
[Monthly Depreciation] = ([Purchase Price] - [Salvage Value]) / [Expected Lifetime (years) x 12]Example: ($259 - $50) / (5 × 12) = $3.48/month, which is rounded to approximately ~$3/month.
Annual Rounding Rule: The Annual Depreciation result is rounded to the nearest whole dollar before being used in further calculations.
Example: A calculated value of $41.80/year will be stored and displayed as $42/year.
Effective Monthly Rate: The monthly rate is calculated as: Annual Depreciation / 12, and is also rounded to the nearest whole dollar per month.
4. Current Book Value Calculation
The Current Book Value is determined by subtracting the total recognized monthly depreciation from the initial cost:
Current Book Value = Purchase Price - (Monthly Depreciation × Number of Elapsed Months)
5. Last Period Adjustment Rule
If the depreciation expense for the final depreciation period does not round cleanly, the system adjusts the final expense to ensure the asset's value equals the Salvage Value:
Override: The system uses [Salvage Value] - [Period starting book value].
Usage: This overridden value is used instead of the calculated Period Depreciation Expense for the final period.
Field used for calculating asset depreciation:
Field Name | Description |
Purchase Price | This is the price of the asset at purchase.
The user must fill out this field to get other depreciation values. |
Salvage Value | This is the amount that an asset is estimated to be worth at the end of its useful life.
The user has to fill out this field to get other depreciation values.
“How much will it be worth at the end of life?” |
Expected Lifetime (years) | This static value represents the years the asset is expected to be useful.
The user must fill out this field to get other depreciation values.
“How many years of use do I expect?” |
Replacement Cost: This is the cost of replacing the asset. It is determined by several factors, such as the item's fluctuating value in the marketplace.
The Replacement cost does not consider depreciation, but its amount is relevant to decision-makers evaluating when assets should be replaced.
Calculated Values
The following values are calculated based on the input data provided in the fields above.
Field Name | Description |
Annual Depreciation | This is how much the asset's value depreciates over the course of a year. This field is calculated automatically.
It can be negative if the Salvage Value has a $ amount but the Purchase Price entered is $0. It may not show if the Salvage Value and the Purchase Price entered are $0. |
Current Book Value | This is the asset's current value, accounting for depreciation. This field is calculated automatically.
It may not show if the Salvage Value and the Purchase Price entered are $0. |
End of Life Date | This is a date the system produces based on the Purchased Date + the Expected Lifetime (years). This field is calculated automatically. |
Remaining life (years) | This is the remaining time until the asset's value reaches zero. This field is calculated automatically. |
Depreciation Periods | This is the number of monthly depreciation periods remaining until the asset's value reaches zero. Depreciation is calculated on a monthly basis - for example, an asset with 5 years of expected lifetime has 60 total depreciation periods. This field is calculated automatically. It may not show at all if both the Salvage Value and the Purchase Price entered are $0. |
Partial Period Calculation of Asset Depreciation
This calculation is applied when an asset is purchased partway through a fiscal year to ensure depreciation is recognized accurately.
Principle of Recognition
The system only recognizes depreciation for fully completed calendar years.
The current, in-progress fiscal year's depreciation is not recognized to prevent premature accounting.
Calculation Period
The total elapsed time is calculated from the asset's Purchase Date to December 31st of the previous calendar year (not the current year).
Calculation Example
If the Purchase Date is July 1, 2023, and the calculation is performed in 2026, the elapsed period used is July 1, 2023, to December 31, 2025 (30 months).
Basis for Depreciation
Asset Depreciation is strictly time-based and is not based on cost analysis.
Cost Tracking Tab
The Cost Tracking tab on an individual Asset profile contains an overview of information that allows users to view costs incurred for a single asset.
This tab includes three sections:
Asset Depreciation
Accumulated Cost
Associated tickets with Labor and Parts costs
The Asset Depreciation section includes an overtime graph that visually represents how the value of an asset decreases over its expected lifespan. This graph enables users to track the asset's depreciation for each fiscal year until the end of its expected life.
The Graph is based on the Fiscal Year.
The Cost Tracking tab provides visual cost-tracking information, while the Asset Details tab allows for editing and updating of asset information.
View and Edit Asset permissions regulate the ability to enter Depreciation fields/values.
You can see the line graph representing the Accumulated Cost for an asset on the Cost Tracking tab. This can be used to compare Accumulated Costs and Current Book Value.
As costs update (based on tickets with parts and/or labor associated with that asset) over a year, the point on the graph should reflect those changes.
It is also possible to hide individual components of the graph. Clicking on the Book Value/Current Year components will hide them and will only show the blue line for the Accumulated Cost.
Clicking on the Accumulated Cost component will hide it and will only show the Book Value and Current Year.
If there is no depreciation data for an Asset, but there is parts and labor data, the graph will only show the blue line representing Accumulated Cost.
In the top right corner, there will be an "Edit Depreciation Info" button. This button will allow you to update the Purchase Date, Purchase Price, Salvage Value, and Expected Lifetime (in years) without having to leave the tab. This will make it simpler for you to see the direct impact of those updates on the calculated Annual Depreciation, Current Book Value, and End of Life Date.
The Cost Tracking tab is available on individual Asset profiles, even if no data is displayed. When there is insufficient data, the tab will indicate the required information to populate values.
Columns and Filtering
Users can add additional columns to an Assets View related to Asset Depreciation. These columns include Current Book Value, Replacement Cost, Salvage Value, and Expected Lifetime. These columns can also be included in an export as well.
Some fields must have specific asset data on file: Purchase Date, Price, Useful Life, and Salvage Value. If this data isn’t available, the fields will be blank.
You can apply Current Book Value and End of Life date filters to asset views. These filters are available in IT and Facilities.
Setting Asset Depreciation Info in Bulk
Asset Depreciation information can be updated using Bulk Actions. These fields include Replacement Cost, Salvage Value, and Useful Life.
You can do this by selecting the assets you want to update, selecting the Other dropdown menu, and then Set Info.
Select the Asset Depreciation field you would like to update and click Add Field.
Enter the amount in the Replacement Cost field and select Update Assets ( X ) to update this amount in all assets.
Import Asset Depreciation Data
Asset Importer supports three depreciation-related fields, enabling users to track depreciation values alongside existing asset data.
These fields are:
Replacement Cost
Salvage Value
Expected Lifetime (years)