> For the complete documentation index, see [llms.txt](https://kb.logicerp.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://kb.logicerp.com/logic-erp-learning-hub-tutorials-and-best-practices/accounts/a-c-voucher/journal-voucher/journal-normal/configure-and-manage-depreciation.md).
# Configure and Manage Depreciation
**YouTube:** [How to Configure and Manage Depreciation in Logic ERP?](https://youtu.be/OCLbYxd7zAc)
## How to Configure and Manage Depreciation in Logic ERP?
This tutorial explains how to configure **Fixed Assets and Depreciation Calculation** in Logic ERP. It covers Account setup, Asset configuration, Depreciation methods, Journal Entry posting, and generating the Depreciation Schedule Report for accurate financial tracking.
***
### Access **Setup New Account Window**
**Depreciation Account Creation**
* Go to **Main Menu** and then **Setup Module** open **Setup New Account.**
* Define Depreciation Account Name
* Account Type: **Expenses**
* Save the Account
**Fixed Asset Account Creation**
* Create another Account for **Fixed Assets**
* **Account Type: Fixed Assets**
#### **Configure Asset Details**
* Open Other Details Window
**Define Asset Information**
* **Original Cost of Asset**
* **Purchase Date of Asset**
* **Additions to Date (If Any)**
* Additional value added to the Asset over time.
* **Deductions to Date**
* Value of Asset sold, removed, or disposed
* **Depreciation Amount to Date**
* Total depreciation charged till date
* **Define Depreciation Percentage**
* Annual depreciation rate of the Asset
* **Depreciation Percent After Midyear**
* Used when Asset is purchased during the financial year
* **Depreciation Percentage as per Company Act**
* Based on Asset useful life
* **Select Depreciation Calculation Method**
* Half Year for Additions after Mid Year
* Fully Year for all Additions
* From Purchase Date (Current Year Additions)
**Note:** In this tutorial, we will proceed with the "Full Year for all Additions" option.
* **Select Depreciation Mode**
* **Diminishing Value Method (WDV)**
* Remaining Asset Value every year
* **Straight-Line Method (SLM)**
* Fixed Depreciation amount charged every year
**Note:** In this tutorial, we will proceed with the "Straight Line" method.
* **Define Useful Days**
* Useful Days represent total expected usage period of the Asset
* Save the Account after completing all details
***
### **Pass Depreciation Journal Entry**
* Go to **Main Menu** and then **Accounts Module** open **Journal Voucher Normal Entry**
* Pass the **Depreciation Journal** Entry.
* Save the Voucher.
***
### **Generate Depreciation Report**
* Go to **Main Menu** and then **Reports/Queries.**
* Select **Balance Sheet Reports** Open **Depreciation Schedule Report.**
* Select **Plant & Machinery Account** from **Filter Tree**.
**Define As On Date**
* As On Date:
* **31st March 2026**
* **Note:** 01-04-2025 is the date we defined while creating the Fixed Asset Account.
**Result**
* Applicable calculation period becomes:
* **365 Days**
***
### **Understand Depreciation Calculation**
**System Calculation**
The software automatically calculates:
* Original Cost
* Net Value after Depreciation
* Month-wise Depreciation
**Depreciation Formula Used.**
Since:
* **Original Asset Value** **=** ₹1,00,000.
* **Useful Days** **=** 1,095 Days (3 Years).
* **Applicable Days =** 365 Days.
The software calculates depreciation using:
* **Depreciation =** 365/1095x100000.
**Calculated Result**
* Approximate Depreciation:
* **₹33,333.**
***
#### **Month-Wise Distribution**
* The software automatically distributes yearly depreciation:
* Based on exact number of days in each month.
* The formula used to apply this is:
* Total Dep During the Year x No of Days in Month / Total Days in Year.
* **Ensures:**
* Accurate month-wise depreciation calculation.
***
### **Key Benefits**
* Automated depreciation management.
* Accurate asset valuation.
* Flexible depreciation calculation methods.
* Simplified financial reporting and compliance.
***
### **Best Practice Tips**
* Define correct Useful Days and Purchase Dates.
* Regularly update additions and deductions.
* Choose the appropriate depreciation method as per accounting standards.
***
### **Final Outcome**
* Fixed Assets and Depreciation are configured successfully.
* Accurate depreciation calculations generated automatically.
* Month-wise and yearly depreciation tracking available.
* Improved financial reporting and asset management in Logic ERP.
---
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