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title: "Fixed Assets - Depreciation methods"
canonical: "https://wiki.soft1.eu/space/SS5EN/336134146/Fixed%20Assets%20-%20Depreciation%20methods"
format: markdown
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Depreciation of a fixed asset involves calculating the gradual decrease in its value over time, (attributed to factors such as usage,<span style="color: #ff991f"> </span>wear and tear, etc.) which results to the relevant accounting entries. 

Each year, the company calculates the decrease in value of fixed assets stemming from their use in the production process and includes it in the cost of goods or services produced. Thus, it is considered part of the Operating costs. Consequently, when the company sells its goods or services, it also collects the decrease in value of the fixed assets, allowing for their replacement when fully depreciated. Fixed assets with an indefinite useful life, such as land or works of art, are not subject to depreciation.

In SOFT1 ERP, the annual depreciation amount is calculated using the following methods: Straight line - Descending - Production units method.   

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