Depreciation explained
How AssetTrove calculates what your devices are worth, the methods and conventions available, and worked examples.
Depreciation spreads the cost of a device over its useful life, so your books show what it's worth today. AssetTrove calculates it automatically every month.
What each schedule needs
| Field | Meaning |
|---|---|
| Cost basis | Purchase price plus costs such as delivery and set-up, without reclaimable VAT |
| Salvage value | What it will still be worth at the end. Must be less than the cost |
| Useful life | In months, for example 36 |
| Method | See below |
| Convention | How the first month is handled. See below |
| In-service date | When it started being used |
| Book | Financial or Tax. An asset can have one schedule for each |
Devices cheaper than your organisation's capitalisation threshold (for example €450) are expensed: the full cost is booked in the month they go into service.
Methods
| Method | How it works |
|---|---|
| Straight-line | The same amount every month: (cost − salvage) ÷ months |
| Declining balance | A fixed percentage of the remaining book value each fiscal year, so more in early years |
| Declining balance, switching to straight-line | As above, but each year it switches to straight-line once that gives the larger charge |
| Sum-of-years' digits | Front-loaded, decreasing by a fixed step each year |
| Expensed | Everything in the first month |
Conventions for the first month
| Convention | First month |
|---|---|
| Full month | A full month, whatever day it started |
| Mid-month | A half month if it started on the 16th or later, with the other half added at the end |
| Next month | Nothing in the first month; starts the month after |
| Half year (tax books) | Half of the first year's charge |
Example: straight-line
A laptop costs €1,500, with €100 salvage value and a life of 36 months, in service on 10 January 2026, using Full month.
- To depreciate: €1,500 − €100 = €1,400
- Each month: €1,400 ÷ 36 = €38.888… → €38.89
- Months 1 to 35: 35 × €38.89 = €1,361.15
- Month 36 (December 2028): €1,400.00 − €1,361.15 = €38.85
At the end the book value is exactly €100, the salvage value. AssetTrove always puts the rounding difference in the last month, so the total is never a cent out.
Example: declining balance with switch
Same laptop, double declining balance (rate 2.0), starting on the first day of the fiscal year:
| Year | Value at start | Declining balance charge | Straight-line on what's left | Used | Value at end |
|---|---|---|---|---|---|
| 1 | €1,500.00 | €1,000.00 | €466.67 | €1,000.00 | €500.00 |
| 2 | €500.00 | €333.33 | €200.00 | €333.33 | €166.67 |
| 3 | €166.67 | €111.11, capped at €66.67 | €66.67 | €66.67 (switched) | €100.00 |
Changes during an asset's life
- Changing the useful life or salvage value affects only the future. The remaining value is spread over the remaining months; past months are never rewritten.
- Impairment (a sudden loss of value) reduces the book value in that month, and later charges are recalculated.
- Cost-centre changes mid-month: the whole month goes to the cost centre that has the asset at the end of the month. You can switch your organisation to splitting by days instead.
- Retired devices depreciate until the end of the month they're retired, then stop.
- Back-dated in-service dates into closed months are caught up in a single entry in the current open month.
All amounts use exact decimal arithmetic and are rounded to the cent (half-even) per month.