Calculation of depreciation when an asset is added

After calculating the prior depreciation, the entire catch-up depreciation for the previous depreciation period is recovered at the end of the current period.

The remaining periods in the year receive the regular depreciation.

Compute option Yes
Journal entries that are generated
  • Asset (debit) and asset clearing (credit)
  • Depreciation expense (debit) and accumulated depreciation (credit)
Result
Additional steps that are required If the in-service date for the asset is from a prior and closed year, then you must manually post the Global Ledger journal entries for the accumulated depreciation of the prior year's depreciation expense. The asset book year-to-date amount for the current period is the same as the asset that is routinely depreciating since its in-service date.