What is Depreciation?
- Depreciation
- Depreciation is the systematic allocation of a fixed asset's cost over its useful life, reducing the asset's book value and creating an annual expense in the P&L.
Depreciation Methods
Straight Line Method (SLM): equal charge every year = (Cost − Salvage Value) / Useful Life. Written Down Value (WDV): declining balance charged as % of remaining book value — front-loads depreciation. Double Declining Balance: accelerated depreciation at 2× the SLM rate. Indian companies often use WDV as mandated by Income Tax Act Schedule II.
Depreciation in ERPNext
Configure the depreciation method on each Asset record in ERPNext. The system generates a depreciation schedule automatically. Monthly depreciation is posted to the Depreciation Expense account (P&L) and Accumulated Depreciation account (Balance Sheet contra-asset) via a scheduled background job.
Infonoxe Technologies specialises in ERPNext implementation and custom software for Indian businesses.
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