Explanation of how to calculate depreciation using the straight-line method in Qoyod system.
Answer:
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Qoyod uses the straight-line method to calculate depreciation.
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The annual depreciation installment is calculated according to the following formula:
Annual Depreciation Amount = (Book Value of Asset – Scrap Value) ÷ Useful Life of Asset
- In case it’s a leap year, i.e., 366 days instead of 365 days (such as 2024), one additional day of depreciation is added to the annual depreciation amount.
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If depreciation is calculated daily, the result is divided by the number of days in the year.
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If depreciation is calculated monthly, the daily depreciation value is multiplied by the number of days in the month (30 or 31 days).
Practical Example:
- Asset: Third Edition Electric Vehicles
To view asset information, click on the “View” button next to the required asset 
The asset data will appear
- Book Value: 30,000
- Scrap Value: 2,000
- Useful Life: 10 years
Annual Depreciation Calculation for 2025:
(30,000 – 2,000) ÷ 10 = 2,800 SAR annually
Daily Depreciation Calculation for 2025:
2,800 ÷ 365 = 7.67 SAR daily
Monthly Depreciation Calculation (for October (31 days)):
7.67 × 31 = 237.77 SAR
If we assume the asset was purchased on 1-6-2024 and we want to calculate the annual depreciation for 2024
To calculate depreciation from June 2024 through the end of December 2024
• June (30 days) 30 × 7.67 = 230.1
• July (31 days) 31 × 7.67 = 237.77
• August (31 days) 31 × 7.67 = 237.77
• September (30 days) 30 × 7.67 = 230.1
• October (31 days) 31 × 7.67 = 237.77
• November (30 days) 30 × 7.67 = 230.1
• December (31 days) 31 × 7.67 = 237.77
Total depreciation from June through December 2024 is 1641.38
Additional Notes:
- The monthly depreciation value differs based on the number of days in the month.
- The depreciation calculation method cannot be changed within the system.
- The annual depreciation value differs if it’s a leap year (366 days), where one additional day of depreciation is added to the depreciation amount, such as in 2024.
Keywords for inquiry:
- System calculated depreciation incorrectly
