Configuring Depreciation of Fixed Assets

This document explains how you configure depreciation for fixed assets in order to make the depreciation automatic and optimal for the company.

See Methods for Depreciating Fixed Assets for further information.

Outcome

Rules controlling the creation of depreciation plans are defined for each FA type. Also, rules for extraordinary depreciation are defined.

The rules are automatically applied when entering an asset, and are totally or partially applied when selling, disposing of, dividing or splitting an asset.

For further information, see the documents listed in the See Also section.

Before you start

The company must have a plan for managing fixed assets.

Follow These Steps

Outline
  1. Create Depreciation Type

    Define the basic categories of depreciation, so-called depreciation types, in 'FA Depreciation Type. Open' (FAS050/B). These types control, among other things, the period range (for example, quarterly or monthly depreciation) and the depreciation start date.

  2. Create Depreciation Template

    If you want to use the double declining method, which is based on declining balance, you need to define a factor (coefficient). The factor is defined in 'Depreciation Template. Open for Declining Depreciation' (FAS025).

  3. Create User-defined Depreciation Plan

    If the company wants to use a customized depreciation plan, you can create it in 'FA Depreciation Plan. Open' (FAS055). The lifetime of the asset is entered, as well as a percentage.

  4. Connect Depreciation Type to Fixed Asset Type

    Connect a depreciation type to a fixed asset type in 'FA Type. Connect Depreciation Types' (FAS077). You can then configure each depreciation type further, including defining which of the three main methods for depreciation to use: linear, declining balance or user-defined depreciation. Also, variants of these can be selected.

  5. Configure Extraordinary Depreciation

    To enable extraordinary depreciations, select a value type for the depreciated amount and how it will continue when the depreciation has been made. This is defined in 'Settings - Extraordinary Depreciation' (FAS920).

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