# Fixed assets depreciation method

Dear Experts,

Could you please help me out.For the depreciation part in Fixed assets we have checked that five depreciation methods given Declining Balance 1 and 2 ,DB1/SL and DB2/SL and user defined and manual.

Please explain us how it will work all the method.

I understood the Straight Line method but remaining i am not getting. Pls help us with the case study.

Straight Line Method :- When this method is used, a fixed asset is depreciated by the same amount each year.

Declining-Balance 1 :- This is an accelerated depreciation method that allocates the largest portion of the cost of an asset to the early years of its useful lifetime. If you use this method, you must enter a fixed yearly percentage. The program uses this formula for calculating depreciation amounts: Depreciation Amount = (Declining-Bal. % * Number of Depreciation Days * Depr. Basis) / (100 * 360)

Declining-Balance 2 :- The Declining-Balance 1 method and the Declining-Balance 2 method calculate the same total depreciation amount for each year. If, however, you run the Calculate Depreciation batch job more than once a year, the DB 1 method will result in equal depreciation amounts for each depreciation period. The DB 2 method, on the other hand, will result in depreciation amounts that decline for each period.

DB1/SL :- DB1/SL is an abbreviated combination of Declining-Balance 1 and Straight-Line. The Calculate Depreciation batch job calculates a straight-line amount and a declining balance amount, but only the greater of the two amounts is transferred to the journal.

DB2/SL :- This method uses the same principle as DB1/SL, but the declining-balance depreciation amounts are calculated according to the Declining-Balance 2 method.

User Defined :- The program has a facility that allows you to set up user-defined depreciation methods. With a user-defined method, you use the Depreciation Tables window, where you must enter a depreciation percentage for each period (month, quarter, year, or accounting period). The formula for calculating the depreciation amounts is: Depreciation Amount = (Depreciation % * Number of Depreciation Days * Depr. Basis) / (100 * 360)

Manual :- When you use the manual method, you must enter depreciation manually in either the FA G/L journal or the FA journal. The Calculate Depreciation batch job omits fixed assets that use the manual depreciation method. You can use this method for assets that are not subject to depreciation, for example, land.

Hope this will clear youâ€¦