Reference: Depreciation Methods

Workday supports most standard depreciation methods.

When you select a depreciation method on the

Create Depreciation Profile

task, Workday prompts you for the additional parameters that the method requires.

In this table, the depreciable basis of an asset is: Asset Cost - Bonus Depreciation - Residual Value.

Depreciation Method	Description	Additional Parameters
Straight Line	When the depreciation rate basis is Periods , Workday calculates the period depreciation expense as the asset depreciable basis divided by the number of periods in the asset useful life. When the depreciation rate basis is Number Of Days , Workday calculates: The daily depreciation expense as the asset depreciable basis divided by the number of days in the asset useful life. The period depreciation expense as the daily depreciation amount multiplied by the number of days in the period. When Workday rounds the depreciation expense, there might be slight variations in the depreciation expense between periods.	Depreciation Rate Basis Useful Life (Periods)
Declining Balance	Workday applies the annual depreciation percentage to the asset depreciable basis (during the first year) or net book value (during the subsequent years). The depreciation expense is larger during the earlier years of the asset useful life, and declines in the subsequent years. When the depreciation expense for a period brings the net book value under the Depreciation Threshold + Residual Value , Workday fully depreciates the asset during this period.	Depreciation Percent Depreciation Threshold Depreciation Rate Basis
Declining Balance with Switch to Straight Line	During each period, Workday calculates: The depreciation amount from the straight-line method. The depreciation amount from the declining balance method. When the amount from the declining method is greater than the amount from the straight-line method, Workday applies the declining balance method. When the amount from the declining method is less than the amount from the straight-line method, Workday uses the straight-line method for the remaining periods.	Depreciation Percent Depreciation Rate Basis Useful Life (Periods)
Sum of Years Digits	Workday recognizes most of the depreciation in the earlier periods of the asset useful life. The sum of years' digits is the sum of the asset remaining years of useful life for each year. Workday steps down the depreciation at the start of each fiscal year. When the first year of depreciation is a partial year, Workday adds the under-depreciated portion of the year to the subsequent years. Example: You have an asset with 5 years of useful life and a depreciation convention of Current Period . You place the asset in service in January. The sum of years' digits is 5 + 4 + 3 + 2 + 1 = 15. The depreciation for the first year is 5 ÷ 15, or 33.33%, of the asset depreciable cost.	Depreciation Rate Basis as Periods Useful Life (Periods)
Term	You can select this depreciation method for the assets that you create from supplier contracts within or outside of Workday, including leased and intangible assets. Workday determines the asset useful life based on: The start and end dates on the supplier contract. The number of days you've suspended the asset. To calculate the period depreciation, Workday applies the calculations from the straight-line method.	Depreciation Rate Basis