diff --git a/erpnext/accounts/doctype/sales_invoice/sales_invoice.py b/erpnext/accounts/doctype/sales_invoice/sales_invoice.py
index 829428eec86..97ded97dd2e 100644
--- a/erpnext/accounts/doctype/sales_invoice/sales_invoice.py
+++ b/erpnext/accounts/doctype/sales_invoice/sales_invoice.py
@@ -1370,8 +1370,9 @@ class SalesInvoice(SellingController):
 						)
 						asset.db_set("disposal_date", None)
 						add_asset_activity(asset.name, _("Asset returned"))
+						asset_status = asset.get_status()
 
-						if asset.calculate_depreciation:
+						if asset.calculate_depreciation and not asset_status == "Fully Depreciated":
 							posting_date = (
 								frappe.db.get_value("Sales Invoice", self.return_against, "posting_date")
 								if self.is_return
diff --git a/erpnext/assets/doctype/asset/test_asset.py b/erpnext/assets/doctype/asset/test_asset.py
index 609a6b9677d..78a7929a4fe 100644
--- a/erpnext/assets/doctype/asset/test_asset.py
+++ b/erpnext/assets/doctype/asset/test_asset.py
@@ -346,6 +346,33 @@ class TestAsset(AssetSetup):
 		si.cancel()
 		self.assertEqual(frappe.db.get_value("Asset", asset.name, "status"), "Partially Depreciated")
 
+	def test_asset_status_after_sales_invoice_cancel(self):
+		from erpnext.accounts.doctype.sales_invoice.test_sales_invoice import create_sales_invoice
+
+		asset = create_asset(
+			calculate_depreciation=1,
+			available_for_use_date="2020-04-01",
+			purchase_date="2020-04-01",
+			expected_value_after_useful_life=0,
+			total_number_of_depreciations=5,
+			opening_number_of_booked_depreciations=2,
+			frequency_of_depreciation=12,
+			depreciation_start_date="2023-03-31",
+			opening_accumulated_depreciation=24000,
+			gross_purchase_amount=60000,
+			submit=1,
+		)
+
+		si = create_sales_invoice(
+			item_code="Macbook Pro", asset=asset.name, qty=1, rate=40000, posting_date=getdate("2023-05-23")
+		)
+		asset.load_from_db()
+		self.assertEqual(frappe.db.get_value("Asset", asset.name, "status"), "Sold")
+
+		si.cancel()
+		asset.load_from_db()
+		self.assertEqual(frappe.db.get_value("Asset", asset.name, "status"), "Partially Depreciated")
+
 	def test_gle_made_by_asset_sale_for_existing_asset(self):
 		from erpnext.accounts.doctype.sales_invoice.test_sales_invoice import create_sales_invoice