Assigning Depreciation Types to Categories
Each combination of category and book can have a default depreciation formula assigned. When new assets are created, they inherit the depreciation settings from their category-book combination. This is the most efficient way to manage depreciation rules — set the defaults at the category level, and only override at the asset level for exceptions.
Prerequisites
- You must be in the Fixed Asset Management profile (see Fixed Asset Management Profile).
- You should have already created your Books and Depreciation Types.
Accessing Categories and Books
Navigate to Financial > Depreciation Setup > Categories and Books:
Note: This is different from Classification > Categories, which is used to create and manage the categories themselves. The Categories and Books screen specifically manages the financial/depreciation settings for each category-book combination.
The Categories and Books Screen
The screen is divided into three sections:
| Section | Content |
|---|---|
| Category Groups (left) | The top-level groupings of categories |
| Categories (right) | The individual categories within the selected group |
| Book Settings (bottom) | The depreciation settings for each book, for the selected category |
Configuring Depreciation for a Category
To set or change the depreciation rules for a category:
- Select a Category Group on the left to see its categories.
- Select a Category on the right to display the book settings at the bottom.
- Click the Depreciation Type for any book to edit its settings.
For each category-book combination, you can specify:
| Field | Description |
|---|---|
| Formula | The depreciation calculation method (e.g. "SL 5yr" for straight-line over 5 years) |
| Indexation | Whether to apply annual indexation. Typically used for property assets where the depreciable base is adjusted for inflation or market movements. |
| Default Recovery Period | The useful life in periods (typically months). For straight-line depreciation, this determines how many periods the cost is spread over. |
Example: Setting Up a New Category
Suppose you create a new category called "Office Furniture" and you have two books: "Management" and "Tax".
- Navigate to Financial > Depreciation Setup > Categories and Books.
- Select the category group that contains "Office Furniture".
- Select "Office Furniture" in the category list.
- For the Management book, set:
- Formula: Straight-Line
- Recovery Period: 120 (10 years)
- Indexation: No
- For the Tax book, set:
- Formula: Declining Balance 25%
- Recovery Period: N/A (declining balance uses a rate, not a period)
- Indexation: No
Any new asset created with the "Office Furniture" category will automatically inherit these settings in both books.
Important Behaviour
Changes only affect new assets. When you modify the category-book settings, the changes apply only to assets created after you save. Existing assets retain whatever depreciation rules they already have.
To apply updated rules to existing assets, you have two options:
- Bulk Update — Select the assets and change their depreciation settings directly. See Assigning Depreciation Types to Many Assets.
- Individual override — Edit each asset's depreciation setup individually. See Assigning Depreciation Types to Assets.
Warning: If you change a category's depreciation type but do not update existing assets, you will have assets in the same category depreciating under different rules. This may be intentional (e.g. a policy change that only applies going forward) but should be documented for auditors.
What Happens When a Book or Category is Created
When you create a new book, the system automatically creates category-book records for every existing category, using the book's default depreciation type. Similarly, when you create a new category, category-book records are created for every existing book.
Tip: After creating a new book or category, always review the auto-generated category-book settings to ensure the defaults are correct for your organisation.
Related Articles
- Depreciation Types — Defining the formulae
- Assigning Depreciation Types to Assets — Overriding at the asset level
- Assigning Depreciation Types to Many Assets — Bulk updating existing assets
- Reviewing Depreciation Setup — Verifying the configuration before calculating
- Books — Understanding how books interact with categories