How to Run Monthly Depreciation

Depreciation is calculated in a spreadsheet and keyed in at month end

Most finance teams keep a depreciation workbook next to the ledger. Each month someone copies the charge for every asset, adds it up, keys one journal and hopes the total matches. When an asset is added, disposed or changed part way through the year, the workbook and the ledger drift apart.

The drift is usually found at year end, when accumulated depreciation on the balance sheet no longer agrees with the sum of the asset rows. Nobody can say which month introduced the difference, because the journal has one line and the detail lives in a file that has since been edited.

Skipped months make it worse. If March is forgotten and found in June, the catch-up is a single number that hides three months of assets bought, moved or retired in between.

Why this happens

• The asset list and the depreciation calculation live outside the system that holds the ledger.
• Each asset has its own method, life and salvage value, but they are not stored with the asset.
• The month is closed before the last asset has been checked.
• Nothing prevents the same month from being posted twice, or a month from being skipped.

Biznsbook addresses this through depreciation runs, asset categories, net book value when Accounting and Finance Management are licensed. Each asset carries its own depreciation settings, and the receipt or conversion that brought it in stays linked to the same record.

Books and registers drift when depreciation is worked out in one place and posted in another. Keeping the settings on the asset, reviewing a preview and posting one journal keeps the register, the ledger and the reports telling the same story.

Step-by-step: Run Monthly Depreciation

Built for accountants, finance controllers and fixed asset managers who depreciate and report on company equipment in Biznsbook. It needs Accounting and Finance Management as well as Fixed Assets Tracking.

1. Set up a category for each kind of asset. Under Finance, Asset categories, choose a default method (straight line or declining balance), a useful life in months, a salvage percentage and, if you want them, specific accounts for cost, accumulated depreciation and expense. New assets in the category start with these values.
2. Check that assets have a method and a life. Open the fixed asset register. An asset with no method, or no useful life, is not depreciated. Existing assets can be added with the depreciation already taken and the date it is stated up to.
3. Open Depreciation runs and start a new run. The suggested month is the next one to do. You can pick any month that has ended. Runs are created in date order, one per month.
4. Review the preview. The preview lists each asset with its cost, book value before, the charge for the period and book value after. Assets that are fully depreciated, disposed or have no method do not appear.
5. Create the draft. Saving the draft records the amounts but posts nothing. You can discard a draft and create it again if you change an asset first.
6. Post the run to the ledger. Posting creates one journal for the whole month. It debits depreciation expense and credits accumulated depreciation, grouped by account, and by cost center when cost centers are enabled and the asset has one. The accounting period must be open.
7. Check net book value. Each asset now shows its new accumulated depreciation and net book value, and the run lists the voucher number that was posted.
8. Reverse the latest run if it is wrong. Open the run and choose Reverse run with a reason. The journal is reversed, the assets return to their earlier book value, and the month can be run again. Only the latest run can be reversed.

Review results after the first full monthly cycle. Adjust roles, mappings, or approvals where the same exception repeats.

Screen names in this guide match the product: Finance, Depreciation runs, Fixed assets, Asset categories, Capitalization queue and Asset reports. Every screen has a Help button.

Common mistakes to avoid

• Mistake 1: The asset list and the depreciation calculation live outside the system that holds the ledger. Repeating this each month usually shows up first in depreciation that does not match the register, a disposal with the wrong gain or loss, or a roll-forward that has to be rebuilt.
• Mistake 2: Each asset has its own method, life and salvage value, but they are not stored with the asset. Repeating this each month usually shows up first in depreciation that does not match the register, a disposal with the wrong gain or loss, or a roll-forward that has to be rebuilt.
• Mistake 3: The month is closed before the last asset has been checked. Repeating this each month usually shows up first in depreciation that does not match the register, a disposal with the wrong gain or loss, or a roll-forward that has to be rebuilt.
• Mistake 4: Nothing prevents the same month from being posted twice, or a month from being skipped. Repeating this each month usually shows up first in depreciation that does not match the register, a disposal with the wrong gain or loss, or a roll-forward that has to be rebuilt.

Note each recurring gap in the monthly review; each should map to a step in this guide.

Best practices that hold up as you scale

• Set up a category for each kind of asset — Under Finance, Asset categories, choose a default method (straight line or declining balance), a useful life in months, a salvage percentage and, if you want them, specific accounts for cost, accumulated depreciation and expense.
• Check that assets have a method and a life — Open the fixed asset register.
• Open Depreciation runs and start a new run — The suggested month is the next one to do.
• Review the preview — The preview lists each asset with its cost, book value before, the charge for the period and book value after.
• Create the draft — Saving the draft records the amounts but posts nothing.

Teams that post depreciation every month, post disposals when they happen and clear the capitalization queue at month end find year end a review rather than a rebuild.

How Biznsbook supports this workflow

depreciation runs is part of Biznsbook fixed asset accounting. Every asset has one record with its cost, depreciation settings, accumulated depreciation and net book value, and it links back to the receipt or conversion that created it.

asset categories is part of Biznsbook fixed asset accounting. Every asset has one record with its cost, depreciation settings, accumulated depreciation and net book value, and it links back to the receipt or conversion that created it.

net book value is part of Biznsbook fixed asset accounting. Every asset has one record with its cost, depreciation settings, accumulated depreciation and net book value, and it links back to the receipt or conversion that created it.

Running depreciation and posting disposals are separate permissions held by finance roles. Viewing finance data, creating journals and managing tracked assets are also separate.

Suggested implementation timeline

1. Week 1: Agree the depreciation policy with your accountant and set up an asset category for each class of asset.
2. Week 2: Enter existing assets with their depreciation to date and start using depreciation runs for the first month.
3. Week 3: Compare the first posted run with your own workings and correct any category defaults.
4. Week 4: Post disposals, clear the capitalization queue and review the register.
5. Ongoing: Monthly review using what a run records and the asset reports.

Related guides

Start with run monthly depreciation, then calculate straight-line depreciation, record asset disposal gain or loss and prepare a fixed asset roll-forward.

Also see receive assets from purchase orders and manage fixed asset depreciation schedules. All guides: asset tracking. Product page: Asset Tracking.

The first month and the last month

By default the month an asset starts is a full month of depreciation. If your policy is to start the month after, change the first-month convention in Accounting settings. It applies to every asset.

An asset never goes below its salvage value, and the final month of its life writes off whatever is left, so rounding never strands a few cents on the books.

Before you post the first run

Decide the date your ledger starts to carry depreciation. Existing assets can be entered with the accumulated depreciation you already hold and the date it runs up to, so the first run only charges the months after that date.

Ask your accountant to confirm the depreciation expense and accumulated depreciation accounts. A category can name its own accounts. Where it does not, the company defaults are used.

Metrics to track monthly

• Draft depreciation runs not yet posted
• Assets with no depreciation method or useful life
• Assets waiting in the capitalization queue
• Disposals marked Disposal to post
• Difference between register net book value and the ledger

Start with three metrics; trend direction matters more than a single point-in-time snapshot.

Manual handling vs Biznsbook fixed asset accounting

Compare doing this by hand with Biznsbook depreciation runs and related capabilities.

What a run records

For every asset in the month: the book value before, the charge and the book value after. The run keeps its status (draft, posted or reversed), its total, the voucher number of the journal, and who created, posted or reversed it and when. A reversed run keeps its lines, marked as reversed, so the history stays readable.

Write this into your month end checklist and revisit it when you add asset categories or change your policy.

Frequently asked questions

How this differs by industry