9. Impact on Depreciation When Working with Fixed Assets

9.1 Depreciation at Sales and Disposal of Fixed Assets

The quantity of an asset is a key factor when adjusting the depreciation at sales, disposal, dividing and splitting of an asset. An asset can consist of several separate parts; that is, the asset can have a quantity greater than 1.

When an asset is sold, the loss or profit is adjusted for the depreciation within the actual period. The sale is done in 'Fixed Asset. Sell' (FAS130). This procedure is also valid when scrapping an asset in 'Fixed Asset. Dispose' (FAS145).

When depreciation at sales or disposal is done, the depreciation plan in (FAS010) is automatically updated (partial sale or dispose) or deleted (total dispose or total sale).

Note: An asset can have more than one depreciation type linked to it. Therefore, the voucher in (FAS130) has two lines for acquisition amount, one of them with reverse sign, and two lines (one with reverse sign) for each depreciation type allocated to the asset.

9.1.1 Example

A company buys an asset for USD 60,000 and the acquisition date is January 1, 2001. The lifetime of the asset is 5 years (= 60 months/periods). According to the linear method, USD 1,000 is depreciated per month. The asset is later sold on October 20, 2001 for USD 50,800. At that time, USD 9,000 is depreciated. The depreciation for October is calculated according to the formula (number of days passed in month of sales/number of days in that month) x period depreciation amount. That is:

20/31 x 1,000=645

The result, then, is as follows: (60,000 – 9,645) – 50,800=+445

9.2 Depreciation at Dividing and Splitting of Fixed Assets

There is a difference between dividing and splitting an asset. Dividing means that an asset with a quantity greater than 1 is divided into two or more assets. Splitting an asset means that an asset with quantity 1 is split into two or more parts.

9.2.1 Example: Dividing Fixed Asset

An original asset consists of 11 chairs. The asset is divided into three assets: one with 6 chairs, one with 3 chairs and one with 2 chairs.

The original asset has an acquisition value of USD 110,000. The depreciated amount is USD 44,000 and the quantity is 11. The dividing is done by quantities.

  New Asset 1 New Asset 2 Original Asset After Division
Acquisition Value 60,000 30,000 20,000
Depreciation 24,000 12,000 8,000
Quantity 6 3 2

The acquisition value and write-offs are divided according to the quantity. In addition, the depreciation plan is updated. The division of one asset into several is done in 'Fixed Asset. Divide' (FAS007), which is accessed from (FAS001).

9.2.2 Example: Splitting Fixed Asset

An original asset, such as a PC recorded as one asset, is split into a CPU, screen and a keyboard. In this example, the screen and keyboard have been created as assets 1 and 2. The original asset is the CPU. The dividing is done by values instead of quantities.

  New Asset 1 New Asset 2 Original Asset After Split
Acquisition Value 5,000 6,000 9,000
Depreciation 1,250 1,500 2,250
Quantity 1 1 1

Each of the new assets can have a quantity greater than 1. The value of the new assets or a percentage/part of the original value is entered manually by the user. The splitting of one asset into several assets is done in 'Fixed Asset. Split' (FAS008).

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