Closing at short year-end

Short years are years that have been closed earlier than the originally defined fiscal year. You need to use the short year-end close procedure when the fiscal year for your company must be revised and ended earlier than previously defined. This procedure outlines the process for conducting a short year-end close.

Before you can conduct year-end closing, you must be finished adding, adjusting, transferring, and disposing of asset records.

Procedure flow: Closing at short year-end

Close a short year

  1. Release unreleased additions, adjustments, transfers, and disposals by running Processing Release (AM170).

    AM170 edits and releases all the unreleased asset processing done during the current period and transfers journal entries to the General Ledger. You must run AM170 before you can continue with closing year-end.

  2. Determine if the 40% tax rule applies to the depreciation calculations.
    1. Access Addition Report (AM220).
    2. Run AM220 to track assets added during the past year. Specify this information:
      In-Service From Date, In-Service To Date

      Specify the beginning and end date for the period you want reported on.

      Property

      Specify or select P (Personal) as the type of property you want included in the report.

    3. Run AM220 to track assets added in the last quarter of the same year you specified in step 2b.
    4. Manually compare the reports from steps 2b and 2c to determine if more than 40 percent of the assets placed in service during the year were placed in the last quarter.
      If Then
      More than 40 percent of the assets were placed in service during the last quarter The 40% rule applies to you. You must adjust the tax book conventions. See step 4 for instructions.
      Less than 40 percent of the assets were placed in service during the last quarter The 40% rule does not apply to you. You may continue the year-end closing by moving on to step 4.
  3. Conditional. If the 40% rule applies to your company, adjust the depreciation conventions for the assets that were placed in service during the fourth quarter of the year.
    1. Access Mass Adjustments (AM125).
    2. In the Convention field on the Asset Book Adjustments tab, change the convention code to MQ (Mid Quarter).
    3. Select the Change form action.
    4. Update the changes made in AM125 by running Processing Release (AM170).
    5. Recalculate the depreciation for the current period by running Depreciation Calculation and Listing (AM180).

      You have finished adjusting the depreciation conventions.You can now continue with routine year-end closing by moving on to step 4.

  4. Calculate the last period's depreciation by running Depreciation Calculation and Listing (AM180).

    Specify this information:

    Book, Book Group

    To run AM180, you must specify a book or a book group. AM180 then calculates the current period's depreciation for the book or book group you selected.

    Company, Company Group

    You must specify the company or the company group for the book or book group.

  5. Reconcile and verify asset information by running the appropriate reports. These reports are recommended. Related reports and inquiries

    • Addition Report (AM220)

    • Adjustment Report (AM225)

    • Transfer Report (AM230)

    • Item Transfer Report (AM235)

    • Disposal Report (AM240)

    • Item Disposal Report (AM245)

    • Asset Report (AM260)

    • Account Balance Report (AM270)

    • Transaction Report (AM275)

    • Activity Report (AM277)

    • Current Year Depreciation Report (AM280)

    • Book Comparison Report (AM285)

  6. Based on the results of the reconciliation done in step 5, revise the asset records as needed.
    Note: If you have depreciation history enabled for the books, you can use Depreciation History Report (AM281) to report on previous year depreciation history.
  7. Back up your data. After you have closed the period, you can no longer generate reports showing period depreciation for the period you are closing, unless you have the depreciation history feature enabled for the book.
  8. Close the last period by running Short Year Close (AM192).
    Note:  Short Year Close (AM192) calculates depreciation differently from Depreciation Calculation and Listing (AM180).

    To verify the journal entries before they are transferred to General Ledger, run AM192 with the Release field set to N (No). AM192 will generate a list of journal entries you can use review and make last-minute changes. After you are ready to release the journal entries, run AM192 with the Release field set to Y (Yes).

  9. Run year-end reports. Related reports and inquiries

    • Addition Report (AM220)

    • Adjustment Report (AM225)

    • Transfer Report (AM230)

    • Disposal Report (AM240)

    • Projection Report (AM255)

    • Asset Report (AM260)

    • Property Report (AM265)

    • Account Balance Report (AM270)

    • Current Year Depreciation Report (AM280)

    • Book Comparison Report (AM285)

    • Tax Credit Report (AM290)

    • Recapture Report (AM292)

    • FASB Reconciliation Report (AM295)

      Note: If you have depreciation history enabled for the books, you can use Depreciation History Report (AM281) to report on previous year depreciation history.
  10. Back up the data. After you have closed the year-end, you can no longer generate reports showing year-to-date depreciation for the year you are closing, unless you have the depreciation history feature enabled for the book.
  11. Close the year by running Year End Close (AM195).
  12. Optional. Verify that the short year closed correctly by opening Calendar (AM01.1) and inquiring on your company and book.
    If Then
    The calendar periods for the new year are blank The year closed correctly, and you are finished with the year-end close procedure. You must rebuild the calendar.
    The calendar for the short year you tried to close is visible The short year-end close has not been completed. Review the short year-end close process again.
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