Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @
Review date: 2025-08-20
Next review date: 2026-08-20
This policy applies to all fixed assets that have been capitalized in accordance with the Fixed Asset Capitalization Policy (FIN-005) and are currently in use by the Company.
To provide clear and consistent guidelines for the calculation, recording, and reporting of depreciation for Easyterms Ltd.'s fixed assets, ensuring the entire cost of capital assets is allocated systematically over their useful lives.
This policy applies to all fixed assets that have been capitalized in accordance with the Fixed Asset Capitalization Policy (FIN-005) and are currently in use by the Company.
Method: All fixed assets will be depreciated using the straight-line method over their estimated useful life.
Allocation: Depreciation is calculated and allocated monthly.
Commencement: Depreciation shall commence in the first month following the month the asset is placed into service (acquisition date).
Cessation: Depreciation will continue until the asset's accumulated depreciation equals its original installed cost, or until the asset is formally retired or disposed of from service.
The following table provides the standard estimated useful lives for capital asset categories. These lives may be adjusted due to changes in business environment, technology, or the specific use of the equipment, subject to CFO approval.
Capital Asset Category | Estimated Useful Life |
Furniture | 10 Years |
Vehicles | 5 Years |
Equipment (General) | 5 Years |
Computer Hardware | 3 Years |
Software | 5 Years |
A fully depreciated fixed asset (where Accumulated Depreciation equals Original Installed Cost) will remain in the fixed asset sub-ledger until the asset is formally retired from service. No further depreciation expense will be recognized once the asset is fully depreciated.
Chief Financial Officer (CFO): Responsible for the final review and approval of the monthly depreciation calculation sheet and the depreciation journal voucher.
Financial Department (Accountant): Responsible for the accurate calculation, recording, and posting of monthly depreciation expense based on the rates and methods defined in this policy.
Administrative Department: Responsible for informing the Financial Department of any changes to asset status (e.g., disposal or retirement) that would affect depreciation.
This policy will be reviewed and updated annually, or sooner if there are significant changes to accounting standards or business operations that necessitate a change in asset useful lives or depreciation methods.