Configure and Manage Depreciation

YouTube: How to Configure and Manage Depreciation in Logic ERP?

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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