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Depreciation methods

Depreciation methods

Overview

The Depreciation Methods screen defines the calculation rules ActivoHQ applies when it depreciates Assets. Each method combines an algorithm (straight-line, declining balance or units of production) with its parameters. Methods are assigned to Asset models and, through them, to each asset; Depreciation runs use them to work out each period's charge.

How to get there

Master > Depreciation Methods

Direct URL: /master/depreciation-methods

Key concepts

Term Definition
Straight-line Spreads the depreciable cost evenly across the useful life. It is the most widely used method and the one accepted by default for tax purposes in Panama.
Declining balance Applies a fixed percentage to the book value, so the charge is larger in the early periods. It needs the Declining Balance Factor (for example 2 for double declining balance).
Units of production Calculates depreciation from the asset's actual use (hours, kilometers, units produced). It requires usage to be recorded under Accounting > Usage entry.
Half-year convention Recognizes half a year of depreciation in the year of acquisition and another half in the year of disposal, whatever the exact month.
Code The method's unique identifier within the company. Not editable once created.

How to use it

Create a method

  1. Click New.
  2. In the New Depreciation Method dialog, fill in:
    • Code (required): the unique identifier, for example SL-60.
    • Name (required): a descriptive name.
    • Algorithm (required): Straight-line, Declining balance or Units of production.
    • Declining Balance Factor: only appears when the algorithm is Declining balance.
    • Half-year convention: tick it if it applies.
    • Description (optional).
    • Active: ticked by default.
  3. Click Save.

Edit a method

Click the Code in the table, or use Edit from the context menu. The Code is not editable. Changes affect future runs; runs already posted are not recalculated.

Delete methods

  • One at a time: right-click the row, choose Delete, and confirm.
  • Several at once: tick the row checkboxes and use Delete (N) in the top bar.

A method used by models or Assets cannot be deleted; untick Active to take it out of the lists.

Filter by algorithm

The Algorithm column uses a menu filter with the readable names (Straight-line, Declining balance, Units of production) and the All option.

Fields

Field Type Required Description Validation
Code Text Yes The method's unique identifier. Entered only at creation. Cannot be empty.
Name Text Yes A descriptive name for the method. Cannot be empty.
Algorithm Drop-down Yes Straight-line, Declining balance or Units of production. An option must be selected.
Declining Balance Factor Number Conditional The multiplier applied to the straight-line rate. Visible and applicable only with the Declining balance algorithm.
Half-year convention Checkbox No Applies half a year in the year of acquisition and of disposal. None.
Description Text No What the method is intended for. None.
Active Checkbox No Enables the method for new assignments. None.

Table columns

Column Description
Code The method's code. Click it to edit.
Name Descriptive name.
Algorithm The calculation algorithm, filterable by name.
Half-Year Whether the half-year convention applies.
Active The record's status.

Permissions

Action Permission
View the screen DepreciationMethods.View
Create DepreciationMethods.Create
Edit DepreciationMethods.Edit
Delete DepreciationMethods.Delete

Notes

  • The method is assigned on the asset model; Assets inherit it when they are registered.
  • For the Units of production algorithm you must record the period's usage under Accounting > Usage entry; with no usage readings, the run produces no charge for those Assets.
  • Changing the algorithm of a method already in use alters the calculation of subsequent runs. If you need to keep the history intact, create a new method instead of changing the existing one.

Troubleshooting

Symptom Likely cause Resolution
The Declining Balance Factor field does not appear. The selected algorithm is not Declining balance. Select Declining balance to enable it.
The depreciation run produces no charge for certain Assets. The method is Units of production and there are no usage readings for the period. Record the usage under Accounting > Usage entry and run it again.
The method cannot be deleted. It is assigned to models or Assets. Untick Active, or reassign the models to another method.
The method does not appear when editing an asset model. It is inactive or belongs to another company. Tick Active and check the active company.

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