This field is required and defaults to Fiscal Period. It defines how annual depreciation is spread across fiscal periods. You have the following options:
- Fiscal Period - With this method, the depreciation expense is spread evenly over the estimated useful life of the asset. This method assumes that physical obsolescence of an asset occurs evenly from the time the asset has been placed into service until the full write-off of its cost, regardless of whether the asset was in service for the entire duration of the fiscal period.
This calculation method is expressed in the following formula:
Period Depreciation = (Acquisition Value - Salvage Value - Depreciation Start Balance) * Depreciation Rate, where
Depreciation Rate = 100% * (1 / [Number of fiscal periods in useful life])
- Daily - With this method, depreciation is calculated based on the exact number of days in each fiscal period within a financial year. This method is sensitive to the actual number of days the asset was in service in a given fiscal period.
This calculation method is expressed in the following formula:
Period Depreciation = (Acquisition Value - Salvage Value - Depreciation Start Balance - Previously Accumulated Depreciation) * Depreciation Rate, where
Depreciation Rate = 100% * (1 / [useful life in days - number of days in the previous period for which depreciation was calculated])