Management of depreciation calculation
Module Description
This module describes implementations in Fixed Assets management that help make depreciation setup and calculation more efficient.
Setup
Fixed Asset Card
- Fixed asset class code: allows you to define the type to which the fixed asset belongs
- Fixed asset subclass code: based on the class entered, it is possible to indicate a subclass linked to it, and only to it, which can be selected
In the Fixed Assets Subclass, there are fields that allow you to enter the parameters to calculate the depreciation for those categories of fixed assets whose percentages are predefined:
- Straight-line depreciation percentage: allows you to indicate the depreciation percentage when the depreciation method set for the asset is Straight-line
- Use half-yearly convention: this is used to indicate whether the depreciation percentage of the asset should be halved in the first year
- Depreciation Table Code: allows you to select the Depreciation Table Tab when the depreciation method set for the fixed asset is User Defined
The depreciation method is set in the Depreciable Assets Registers tab and determines how the calculations will be performed. The two main methods are:
- Constant rates: a fixed depreciation percentage is set for each year of the asset's life
- User defined: a depreciation table is specified in which the specific depreciation percentage is indicated for each year of the asset's life
Filling in the subclass in the Fixed Asset Sheet reports the parameters described above for calculating the fixed asset's depreciation.
Setup Origins
In Setup Origins, on the Supplier tab, there is the Disable depreciation on asset posting date option:
This selection means that, in the event of recording a purchase invoice that increases the value of an asset, depreciation is not calculated.
Functionality
When a new purchase invoice is entered, which increases the value of a previously purchased asset, the Depreciation at asset posting date flag, active by default, calculates a depreciation quota on the original value of the asset.
Depreciation is then calculated for the period from the invoice posting date to the final depreciation date on the asset's old value; thus, depreciation for subsequent months is also increased by the new value.
If the Disable depreciation on asset posting date option is active, this depreciation calculation is not performed, moving a portion of the depreciation to the end of the asset's useful life.
Asset Management
In addition to information on these specific setups and settings, for a complete overview of fixed asset management, please refer to the following link: Managing Fixed Assets .