Depreciation Set-up

Set Configuration >> Costing Convention for Qty Items as “FIFO”

Receive an Item of ‘1’ qty with cost of 100.00 and life as say ‘2’ in the first Batch

So every month 50.00 will be depreciated

Now Receive ‘1’ more qty with cost of 150.00 and life as say ‘2’ in the second Batch

So item will be depreciated by 125.00 ((100+150)/2 (life)=125.00

Now create a sale order and sell ‘1’ qty the Item, so based on the configuraton settings (i.e FIFO), system will sell the qty received in the first batch (i.e of cost 100.00) and remaining qty (received on second Batch) will be depreciated with cost of 150.00

If the configuration is set as ‘LIFO’ then sytem will sell the qty received in second batch and the item will be depriciated with cost of 100.00 (i.e cost qty recived in First batch

Similarly if configuration is set as ‘Average’ then then system will depreciate based on average Cost i.e 100+150/2=125.00