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Why Business Central Depreciation Differs from Your Calculation After Migration

Just migrated to Business Central and the monthly depreciation doesn't match your schedule? In most cases BC isn't wrong. The accumulated depreciation migrated at cut-off was higher or lower than it should have been, and BC is correcting it over the asset's remaining life.

Quick answer: BC's straight-line method doesn't simply carry on your fixed monthly amount. Each time depreciation runs, it takes the asset's current net book value and spreads it evenly over the time left until the Depreciation Ending Date. If the migrated asset was under-depreciated, BC charges more each month to catch up. If it was over-depreciated, BC charges less.

How BC calculates it

Depreciation = (Book Value − Salvage Value) × Depreciation Days ÷ Remaining Depreciation Days

In plain words: what's left to depreciate, divided by the time left. This makes sure the asset is fully depreciated on its Depreciation Ending Date, even if the opening balance was off.

Example

1. The asset was migrated with a cut-off date of 31 August 2022.

Migrated fixed asset in Business Central with cut-off date 31 August 2022

Migrated acquisition cost and accumulated depreciation in Business Central

2. Check future depreciation with the Projected Value report.
Search for Projected Value in BC and run it for the asset. It shows the depreciation and book value BC will post going forward.

Searching for the Projected Value report in Business Central

Projected Value report showing future monthly depreciation in Business Central

3. Compare BC with your schedule.
Your schedule says depreciation should be $1,000 a month until 31 December 2022, but BC shows $1,500. Comparing the migrated figures with the correct ones shows why: at 31 August 2022, the migrated asset was under-depreciated by $2,000.

Migrated accumulated depreciation compared with the correct amount, showing a 2,000 shortfall

4. BC spreads the shortfall over the months left.
To fully depreciate the asset by its Depreciation Ending Date, BC divides the net book value by the remaining period. In this example:

  • Shortfall at cut-off: $2,000
  • Months left (September to December 2022): 4
  • Catch-up per month: $2,000 ÷ 4 = $500
  • BC's monthly depreciation: $1,000 + $500 = $1,500
Table comparing actual monthly depreciation with Business Central's recalculated depreciation after migration

If the asset had been over-depreciated instead, the opposite happens: BC posts less than your schedule each month.

How to fix it

  1. Compare the migrated figures with your fixed asset register. Check the acquisition cost and accumulated depreciation at the cut-off date, asset by asset.
  2. Check the dates and salvage value. On the asset's depreciation book, confirm the Depreciation Starting Date, Depreciation Ending Date (or No. of Depreciation Years) and Salvage Value. A wrong ending date changes the "time left" and therefore the monthly amount.
  3. Correct the difference. Not live yet? Fix the figures in your migration file. Already live? Post the difference as a depreciation adjustment in the FA G/L Journal so the net book value matches your register. BC's monthly amount then returns to normal.
  4. Run Projected Value again before your next depreciation run to confirm the amounts.

If the difference is small and acceptable, you can also leave it. BC will catch up automatically, and the asset will still be fully depreciated on its Depreciation Ending Date.

Learn more on Microsoft Learn: Depreciation methods for fixed assets

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Location: Kuala Lumpur, Federal Territory of Kuala Lumpur, Malaysia

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