Depreciation

A 600,000 oven doesn't cost you 600,000 the day you buy it — it costs you that over the eight years it cooks. Depreciation is how the books say so, and here it runs itself.

The methods#

• Straight line — the same charge every period across the useful life. The default, and right for most restaurant equipment.
• Declining balance — larger charges early, smaller later, computed so the value glides to the salvage value over the life. Fits assets that lose value fast when new (vehicles, IT).
• Declining then straight line — starts declining, switches to straight line the moment straight line would charge more — the standard hybrid that avoids the declining method's long tail.

Each asset also carries a salvage value (the floor it never depreciates below) and a useful life in months or years.

Prorata: the first period question#

Buy an oven on the 20th — does the first month charge a full month? The computation method decides:

• No prorata / constant periods — every period charges fully, including the first.
• Days per period — each period's charge scales to its actual days.
• Prorata date — depreciation begins at a date you set, with the first period charged proportionally from it.

Pick per model with your accountant and stay consistent; this is a policy, not a per-asset mood.

The schedule, and who posts it#

Activation generates the whole schedule up front — every period's charge, accumulated total and resulting book value, inspectable on the asset's detail page before anything posts. Then, daily and automatically, due entries become depreciation vouchers: the period's charge lands on depreciation expense, accumulated depreciation grows, book value falls. Nobody remembers to run it, because nobody has to.

Each posted entry links its voucher — from any asset you can walk to the exact ledger lines of any period.

Reading the numbers#

• Book value = original value − accumulated depreciation. What the balance sheet carries; not what the market would pay.
• A fully depreciated asset stops charging and sits at salvage value — still yours, still listed, just done depreciating. Working equipment at zero book value is a happy fact, not an error.