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Depreciation what-if simulator

Depreciation what-if simulator

Overview

The Depreciation What-If simulator compares two depreciation scenarios side by side on the same chart: different methods, different useful lives or different cost assumptions. It exists to help you decide before the asset is registered, to support an Accounting policy, or to answer the classic committee question: how much does the expense change if I depreciate this over 5 years instead of 3?

It also includes a simple lease versus buy comparison.

Nothing entered on this screen is saved. It is an analysis tool: it does not change Assets, does not produce journal entries and does not affect the Depreciation runs.

How to get there

Reports > Depreciation What-If

Direct URL: /Reports/depreciation-what-if

How to use it

1. Start from an existing asset (optional)

  1. Under Load from an existing asset, select the asset (you can type to search for it).
  2. Click Load. Both scenarios fill with that asset's real cost, salvage value and useful life.
  3. Change whatever you want to compare; the loaded values are only a starting point.

2. Define scenarios A and B

For each scenario, complete:

Field Description
Cost (required) The assumed acquisition cost.
Salvage value The salvage value at the end of the useful life.
Useful life (months) (required) Months of depreciation.
Depreciation method Straight-line, Declining balance or Units of production.
Declining Balance Factor Declining balance only. Blank is equivalent to 2.0 (double declining balance).
Total estimated units Units of production only: the asset's total expected output.
Assumed units per period Units of production only: because future usage is unknown, the projection assumes this constant quantity in every period.
Half-year convention Applies half a year on acquisition and on disposal.

3. Compare

Click Compare Scenarios. The Comparison section shows:

  • The Net Book Value chart over time for each scenario, down to the salvage value.
  • A table of indicators:
Indicator What it shows
Total depreciation over the useful life How much is depreciated in total in each scenario.
First-year charge The impact on the first year's result.
Month the Net Book Value reaches near zero When the depreciable value runs out; it shows Not reached if that does not happen within the projected useful life.

4. Lease versus buy (optional)

  1. Under Lease vs. Buy (optional), enter the total lease payments over the same period.
  2. ActivoHQ compares it against Scenario A's depreciable base (cost less salvage value), as a simple approximation of the total cost of owning the asset, and says which option works out cheaper and by how much.

Notes

  • Amounts are shown in the active company's currency and regional format.
  • The lease comparison is a cash approximation: it does not account for implicit interest, the time value of money, maintenance or the Accounting treatment of leases (IFRS 16).
  • For units of production, the projection uses the assumed quantity per period; actual depreciation will depend on the usage you record under Accounting > Usage entry.
  • The simulator uses the same algorithms as the real Depreciation runs, so the figures are comparable with what the system will produce.

Troubleshooting

Symptom Likely cause Resolution
The chart does not appear. Cost or Useful life (months) is missing in one of the scenarios. Complete both fields and click Compare Scenarios again.
The two scenarios look identical. They were loaded from the same asset and nothing was changed. Change the method, the useful life or the cost in one of them.
The month indicator shows Not reached. With those assumptions the book value does not get near zero within the useful life (typical of declining balance with no final adjustment). That is the method's expected behavior; consider the straight-line scenario for comparison.
The results do not match the real run. The real asset uses a different depreciation book, different in-service dates or different conventions. Compare against the asset's Depreciation Schedule.

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