How to Configure Depreciation Methods in iDempiere
The Depreciation Methods window in iDempiere defines how the system calculates the reduction in value of fixed assets such as store fixtures, hardware, and delivery vehicles over time.
Accurate depreciation methods directly affect asset valuation, financial statements, and tax reporting, ensuring stores post correct monthly depreciation entries.
Process Flow
Business Rules
- Active depreciation methods are available for selection on Group account on asset group.
- Each method must have a unique Name within its assigned Organization.
- Depreciation Type determines the calculation logic, such as SL for Straight Line.
Prerequisites
- Business Partner configured.
- Organization (store or branch) configured.
- Asset Group configured.
- Chart of Accounts configured for asset depreciation accounts.
Navigation
Menu → Assets → Depreciation Setup → Depreciation Methods
Configuration Steps
Step 1: Choose Organization
Open the Depreciation Methods window, click New, and choose the Organization from the dropdown, such as Chennai Store, before entering method details.
| Field | Sample Value | Description |
| Organization | Chennai Store | Restricts method to a specific store’s asset records |
Step 2: Define Method Name
Enter a clear, descriptive Name, such as Straight Line, that reflects the calculation approach used for the asset group.
| Field | Sample Value | Description |
| Name | Straight Line | Label shown when assigning a method to an asset |
Step 3: Set Depreciation Type
Select the Depreciation Type that matches company policy, such as SL for Straight Line, so calculations align with accounting standards.
Existing Depreciation types in iDempiere:
- SL – The Straight Line method spreads the cost of an asset evenly over its useful life. Every accounting period (month or year), the asset loses the same amount of value.
- ARH_VAR – The Accelerated Variable method depreciates a large portion of the asset’s value immediately after purchase.
- ARH_AD1 – The Digressive to Linear method starts by depreciating the asset more aggressively in its early years. As the asset ages and its remaining value decreases.
- ARH_ZERO – The Zero Depreciation method does not reduce the value of an asset over time.
| Field | Sample Value | Description |
| Depreciation Type | SL | Straight Line calculation code used for asset value reduction |
Step 4: Add Description
Enter an optional note, such as method purpose or applicable asset category, to support future audits and reviews.
Step 5: Activate the Method
Check the Active box, then save the record so the method becomes available for assignment during asset creation.
| Field | Sample Value | Description |
| Active | Checked | Makes the method available for asset assignment |
Common Issues and Resolutions
| Issue | Cause | Resolution |
| Method not visible on Group account tab in asset group | Active checkbox unchecked | Enable the Active flag and save the record |
| Wrong depreciation calculated | Incorrect Depreciation Type selected | Verify the type code matches accounting policy |
Next Steps
- Configure Asset Groups.
- Set up the Fixed Assets register.
- Link the Depreciation Method to individual asset records.
- Review the Depreciation Workfile before posting entries.