Depreciation methods

Brief overview of the different types of depreciation available in fixed assets in Xero. All depreciation methods can be used for book and tax depreciation.

No depreciation

Asset is not depreciated.

Straight line

Straight line depreciation is calculated evenly throughout the useful life of the fixed asset. Also called Straight Line Reducing Balance.

How Xero calculates straight line depreciation

Diminishing value

Diminishing value depreciation reduces the book value of an asset at a higher rate in the earlier years it is owned.

How Xero calculates diminishing value depreciation

If you are using pools, Xero groups pooled assets and depreciates them as a single entity using the diminishing value method.

How Xero calculates pool depreciation

Full depreciation on purchase

Immediately expenses the full cost of the asset. This is also known as an immediate write-off.