Depreciation is the term used to describe how the original value of an asset declines over time. Clearly this can be due to wear and tear, the pattern of maintenance activity, and the emergence of alternative assets in the future that will be more relevant to future business. Remember however, that depreciation is only an estimate, and different methods of making the estimate can be equally valid in different circumstances.
Since depreciation expense is a transaction which is initiated totally within a business, the taxation authorities set guidelines for the methods which they will accept when taxable income is being calculated. These can be different from the methods used for other purposes.
Pinnacle provides two methods of depreciation: Prime Cost (also called Straight Line) and Reducing Balance (also called Diminishing Value). Pinnacle also provides two methods by which an asset's depreciation can be determined:
Depreciation Report - The depreciation report will calculate depreciation for assets based on details stored on the asset and details provided for the report. This report can be run for any of the user defined Depreciation Books.
Periodic Depreciation - This is a process which much be run at the end of each accounting period. This method will calculate depreciation based on details stored against the asset for the default posting depreciation book, and for the periods since the last time the periodic depreciation process was run.
It is important that you understand the issues surrounding the calculation of depreciation within Pinnacle so that you are using the best options to suit your needs. Contact your support provider if you feel that you need further explanation of the depreciation options available.
Depreciation Report (Calculated)