ERR_DEPRECIATION on Xero: Depreciation calculation error. Root cause: Fixed asset depreciation calculation failed or produced incorrect result. Common causes: incorrect depreciation method applied to asset category, useful life or residual value set to zero, depreciation rate outside allowed range, or asset cost basis modified after depreciation entries already posted. Step 1: Identify which asset has depreciation error. Go to Fixed Assets > Asset List. Review assets and their depreciation status. Look for assets with "Depreciation Error", "Calculation Failed", or unusual depreciation amounts. Click on problematic asset to open details. Note: asset name, purchase date, cost, depreciation method, useful life, residual value. Step 2: Verify depreciation method is correct for asset type. Check asset depreciation method: Straight-line (equal amount each year), Declining Balance (more in early years), Units of Production (based on usage), or other. Verify method matches asset type and company policy. Example: vehicles often use Declining Balance, buildings use Straight-Line. If method wrong, change it and recalculate. Step 3: Verify useful life and residual value are valid. Check "Useful Life" (in years) and "Residual Value" (salvage value at end). Both should be greater than zero. Useful life should match asset type (vehicles 5 years, buildings 40 years, equipment 10 years, etc.). Residual value should be reasonable (usually 10-20% of cost). If either is zero or unrealistic, correct it. Step 4: Verify depreciation rate is within allowed range. For Declining Balance method, check depreciation rate (e.g., 20%, 25%). Rate should be reasonable for asset type and useful life. Example: 5-year asset typically 20% declining balance. If rate is 0% or 100% or outside normal range, correct it. Verify calculation: Annual Depreciation = (Cost - Residual) / Useful Life (for Straight-Line). Step 5: Check if asset cost was modified after depreciation started. Review asset history. If cost basis was changed after depreciation entries posted, this causes calculation errors. If cost was incorrectly modified, revert to original cost. If cost legitimately changed (improvement/addition), create separate asset record for the addition. Do not modify cost of existing asset mid-life. Step 6: Recalculate depreciation and post correcting entries. After corrections, recalculate depreciation. System should automatically generate depreciation entry for current period. If manual calculation needed: Annual Depreciation = (Cost - Residual Value) / Useful Life. Post entry: Debit Depreciation Expense, Credit Accumulated Depreciation. Verify balance sheet shows asset at cost minus accumulated depreciation.