Running periodic depreciation

Running periodic depreciation

At the end of each accounting period (month, quarter, or year), you run depreciation to calculate and record the depreciation expense on each asset. This process automatically computes the depreciation amount based on the asset's cost, useful life, and salvage value, then posts a journal entry to your ledger.

Before you start

• Ensure depreciation is set up on the asset categories and individual assets (see "Setting up depreciation" for details).
• Identify the period for which you are running depreciation (e.g., "2026-06" for June 2026).
• Only assets with status Active are depreciated. Draft or disposed assets are skipped.
• Each asset can be depreciated only once per period; running depreciation twice for the same period will error.

Running depreciation for a period

1. Go to Fixed Assets → Assets. Open in Usystems

2. Select the asset for which you wish to run depreciation, or click Run Depreciation on the assets list page (if your system supports bulk depreciation).

3. Click the Run Depreciation or Depreciation action button on the asset detail page.

4. A depreciation form appears. Fill in:

   • Period: Enter the accounting period in the format YYYY-MM (e.g., "2026-06" for June 2026). This is the period for which depreciation is being recorded.
   • Depreciation Amount (optional): The system calculates the expected amount automatically based on the asset's useful life and cost. You can override this if a special calculation is needed (e.g., partial-year depreciation for newly acquired assets).
   • Memo (optional): Add a note (e.g., "June monthly depreciation" or "Straight-line over 60 months").

5. Review the depreciation schedule preview, which shows:

   • Expected accumulated depreciation
   • Remaining net book value
   • Monthly or periodic depreciation amounts going forward

6. Click Post or Record to submit the depreciation entry. The system:

   • Calculates the exact depreciation amount
   • Creates a journal entry debiting the depreciation expense account and crediting the accumulated depreciation account
   • Records the event in the asset's history
   • Updates the asset's net book value (cost minus accumulated depreciation)

7. A confirmation message appears. The depreciation is now posted.

Handling depreciation for a partial period

If an asset was acquired mid-period or disposal occurred mid-period, you may need to run partial depreciation:

1. Open the asset's Run Depreciation form.
2. Manually enter a reduced depreciation amount (e.g., half the normal monthly amount for mid-month acquisition).
3. Add a clear memo explaining the partial calculation (e.g., "Acquired June 15; half-month depreciation").
4. Post as normal.

Editing or reversing a depreciation entry

Once posted, depreciation entries are permanent. If you need to correct a depreciation error:

1. Go to the asset's Asset History or Event Log.
2. Find the depreciation entry you wish to reverse.
3. Click Reverse or Undo (if available). This creates an opposite journal entry that cancels the original depreciation.
4. Optionally, re-run depreciation with the correct amount.

Note: Reversing does not delete the entry—it marks it as reversed in the history. This maintains audit integrity.

Bulk depreciation (if supported)

If your system supports bulk depreciation:

1. Go to Fixed Assets and select the period (e.g., "2026-06").
2. Click Run Depreciation for Period or similar bulk action.
3. The system identifies all active assets due for depreciation in that period.
4. Review and confirm; the system posts depreciation for all eligible assets at once.

Accounting impact

Each depreciation entry posts:

• Debit (increases): Depreciation Expense account (income statement)
• Credit (increases): Accumulated Depreciation account (balance sheet, contra-asset)

The net effect:

• Depreciation expense reduces net profit by the amount depreciated.
• Accumulated depreciation reduces the gross fixed asset value on the balance sheet, bringing the net book value closer to salvage value as the asset ages.

Tips & common mistakes

• Run depreciation monthly or quarterly: Do not wait until year-end. Regular, timely depreciation ensures accurate financial statements and makes year-end close faster.
• Check the period format: Use YYYY-MM (e.g., "2026-06"), not "June 2026" or "6/2026". Incorrect format will be rejected.
• Do not run twice for the same period: Each asset can be depreciated only once per period. If you run it twice, the second attempt will error. If you made a mistake, reverse the first entry and re-run.
• Communicate partial-period adjustments: If you adjust depreciation for acquisitions or disposals, document it in the memo so auditors understand.
• Review the accumulated depreciation balance: Periodically check that accumulated depreciation is not exceeding the gross cost (which would be an error). See the asset's detail page for the net book value.