Depreciation can be calculated either:

  Automatically  - in Depreciation Calculation (DPC). It uses the depreciation method, the related asset details, and the current asset values to calculate the latest depreciation amounts for a selection of assets.

  Manually  -  via a journal in Ledger Entry (LE). These depreciation transactions must contain the Depreciation asset indicator.

You can change the method or rate of depreciation for a given asset, part way through its life. The Fixed Asset Register caters for this using Depreciation Tables.

Depreciation timing rules can be applied to the depreciation calculations. This is required where depreciation is not spread evenly over each period in the year.

At the end of this session you will be able to:

Setting the Depreciation Processing environment Understand how the Final Asset Value is used Identify the use of Depreciation Timing Rules Understand the outcome of changing the Method of Depreciation Define Depreciation Tables Calculate Depreciation for assets

Setting the Depreciation Processing Environment

The Fixed Asset Register processing environment is determined by the Business Unit Setup (BUS) and Ledger Setup (LS) records. These determine the multi-currency environment and posting rules, the current period, maximum number of periods, etc.

The following Ledger Setup options apply specifically to the asset register and allow you to set overall processing rules to the register.

Depreciation can be calculated either:

  Automatically  - in Depreciation Calculation (DPC). It uses the depreciation method, the related asset details, and the current asset values to calculate the latest depreciation amounts for a selection of assets.

  Manually  -  via a journal in Ledger Entry (LE). These depreciation transactions must contain the Depreciation asset indicator.

You can change the method or rate of depreciation for a given asset, part way through its life. The Fixed Asset Register caters for this using Depreciation Tables.

Depreciation timing rules can be applied to the depreciation calculations. This is required where depreciation is not spread evenly over each period in the year.

At the end of this session you will be able to:

Setting the Depreciation Processing environment Understand how the Final Asset Value is used Identify the use of Depreciation Timing Rules Understand the outcome of changing the Method of Depreciation Define Depreciation Tables Calculate Depreciation for assets

Setting the Depreciation Processing Environment

The Fixed Asset Register processing environment is determined by the Business Unit Setup (BUS) and Ledger Setup (LS) records. These determine the multi-currency environment and posting rules, the current period, maximum number of periods, etc.

The following Ledger Setup options apply specifically to the asset register and allow you to set overall processing rules to the register.

Timing Rule Code
 Depreciation timing rules allow you to apportion the depreciation calculated by Depreciation Calculation, across the accounting periods in the year by a predetermined ratio. If a timing rule is not set, the annual depreciation is divided evenly over the number of periods in the year as specified in the Maximum Number Periods field in Business Unit Setup.

Exclude Final Value from Calculation
If this option is chosen, by default the final value of an asset is excluded from the depreciation calculations. This can be overridden on particular assets.

Assets in Second Base/Reporting Currency
If this option is chosen, asset values are held in both base currency and second base or reporting currency. This can be set for particular assets using the Reporting Conversion Control setting in Fixed Asset Setup (FAS). If the Value 3 Currency Type in Business Unit Setup is defined as Second Base Currency, then a Value 3 amount must always be present.

The Exclude Final Value from Calculation setting in Ledger Setup (LS) determines how the final asset value that can be maintained for an asset, is treated in the depreciation calculations.