Depreciation & Valuation
Track how assets lose value over time with straight-line, declining balance, or units-of-production depreciation methods.
Most physical assets lose value over time through wear, obsolescence, or age. Eleo’s depreciation engine automatically calculates how much value each asset has lost and maintains an up-to-date book value. This helps you understand the true worth of your assets, plan for replacements, and keep your financial records accurate.
Depreciation methods
Eleo supports four depreciation methods. The method you choose determines how the asset’s cost is allocated over its useful life.
Straight-line
The most common method. The asset loses an equal amount of value in each period over its useful life.
Annual depreciation = (Acquisition cost − Salvage value) ÷ Useful life in years
For example, a piece of equipment purchased for 1,000,000 with a salvage value of 100,000 and a useful life of 5 years would depreciate by 180,000 per year.
Declining balance
A percentage of the asset’s remaining book value is depreciated each period. This results in higher depreciation in the early years and lower amounts as the asset ages.
Annual depreciation = Book value at start of year × Depreciation rate
This method is often used for assets that lose value quickly in their first few years, such as vehicles and electronics.
Units of production
Depreciation is based on actual usage rather than time. You define the total expected units of production (e.g. kilometres, hours, or units manufactured), and depreciation is calculated proportionally as usage is recorded.
Depreciation per unit = (Acquisition cost − Salvage value) ÷ Total expected units
This method is ideal for machinery, vehicles, and equipment where wear is driven by usage rather than age.
None
Some assets do not depreciate — for example, land or certain collectibles. Select “None” to skip depreciation entirely. The asset’s book value will remain equal to its acquisition cost unless manually adjusted through revaluation.
Configuration
Each asset’s depreciation is controlled by two key settings:
- Useful life (years) — The number of years over which the asset is expected to provide value. For straight-line and declining balance methods, this determines the depreciation period.
- Salvage value — The estimated residual value of the asset at the end of its useful life. Depreciation stops once the book value reaches the salvage value.
Instead of configuring depreciation for each asset individually, define default depreciation method, useful life, and salvage value on your asset categories. New assets assigned to a category will inherit these settings automatically.
Current book value
An asset’s current book value represents its worth on the books after accounting for all depreciation, revaluations, and impairments:
Book value = Acquisition cost − Accumulated depreciation ± Revaluation adjustments
The book value is recalculated automatically each month when depreciation runs. You can view the current book value on the asset detail page, and historical values are available in the valuation history.
Revaluation
There are times when an asset’s actual value differs significantly from its book value. Revaluation allows you to adjust the recorded value to reflect reality:
- Impairment — A downward adjustment when an asset’s recoverable amount falls below its book value, for example due to damage or market changes.
- Appreciation — An upward adjustment when an asset’s fair value has increased, such as property in a rising market.
To revalue an asset, navigate to its detail page, click Revalue, enter the new value and a reason, and confirm. The adjustment is recorded in the valuation history with the date, type, and the user who performed it.
Valuation history
Every change to an asset’s value is recorded as a valuation event. The valuation history provides a complete audit trail of how the asset’s book value has changed over time. Events tracked include:
- Initial — The acquisition cost recorded when the asset was first registered.
- Depreciation — Monthly depreciation amounts calculated by the system.
- Revaluation — Manual adjustments to the asset’s value.
- Impairment — Downward adjustments due to damage, obsolescence, or market decline.
- Appreciation — Upward adjustments reflecting increased fair value.
- Disposal — The final valuation event recorded when the asset is disposed of.
Asset detail page showing current book value and depreciation schedule
Monthly depreciation runs automatically. Eleo calculates and records depreciation at the start of each month for all active assets. No manual action is required — the system handles everything based on each asset’s configured method and useful life.