Methods (AM02.1)
Use Methods (AM02.1) to define the methods that asset books use for calculating depreciation, replacement cost, and insurance values. Lawson provides six standard depreciation methods and lets you define your own as well.
If you select the Straight Line (SL) depreciation optimizing method, you must indicate the Straight Line calculation. If you leave this field blank, the program defaults to 'N'=Not Applicable to the method switch. See More Help for calculation options.
Methods can calculate depreciation in one of three ways: compute statements, annual percent tables, or units of production (UOP) tables (annual or by period).
Processing Effect
- If your method uses a compute statement, you can also select an optimization method. The Asset Management system will switch to the optimization method whenever it is advantageous to the company, if the book that uses the principal method is defined with the Method Switch field set to Yes.
- If your method uses a UOP annual table, you must enter actual UOPs at the end of each year. The system uses the actual UOPs for its calculations. If the asset life is more than 13 years, you must continue defining the method on the UOP Table Yr 14-26 form tab. The system keeps track of the total estimate units.
- For each year that you define on the UOP Table form tabs, you can click the Periods button to define depreciation calculations by period.
More Information
If you select the straight-line depreciation method, you must select one of the following calculations to derive the depreciation values:
- D, Default: Indicates that the switch occurs when the SL value calculated using current remaining values exceeds the value calculated by the current method, AM switches to using the depreciation method of calculation. The actual calculation shall use the SL value calculated based on remaining asset values.
- O, Original: Indicates that the switch occurs when the SL value determined from original asset values exceeds the value calculated by the current method. The actual SL calculation shall use this original SL value to continue depreciating the asset.
- M, Mixed: Indicates that the switch occurs when the SL value determined from original asset values exceeds the value calculated by the current method. The actual SL calculation shall then be based on straight line calculations using current remaining values.
- N, not applicable: Indicates that the SL Classification field is not applicable to the method switch.
Once this method is created and assets have begun depreciation, you should not modify the SL Classification selection. If the SL classification flag is modified while assets are past the optimization switch point, depreciation amounts would be affected.