Depreciation

Requirement

As commonly required, the value of fixed assets is reduced over time to reflect the fact that the business is consuming their economic value. Depreciation is the accounting method used to reflect this reduction in value. Different businesses in different countries can use different depreciation methods and rules to calculate a periodic depreciation charge.

A fixed asset can have an economic life between one and 999 years.

M3 solution

The M3 Fixed Asset module supports different depreciation methods and bases. These rules are then used to create asset-specific depreciation plans over the asset lifetime. Each fixed asset can be depreciated by different rules, for example, book or tax depreciation.

Configuration guidelines


Program ID	Program name	Description or comment
FAS050	FA Depreciation Type. Open	Connection to fixed asset type. A common set of depreciation types is commercial depreciation, tax depreciation, and calculatory depreciation for cost accounting purposes. Set the Sales acc mtd field to 1-Different accounts for gain and loss.
FAS060	FA Value Type. Open	Connection to fixed asset type.
FAS070	FA Location. Open	Connection to fixed asset type.
FAS080	FA Group. Open	Connection to fixed asset type.
FAS075	FA Type. Open
FAS077	FA Type. Connect Depreciation Types	Specify this information: Below 0 For calculatory depreciation for cost accounting purposes, select this check box. Adjust deprectn Select this check box. Acq depr adj. If the half-year rule is required, set this field to 1-Mid-year. Deprectn method This field is usually set to 1-Linear depreciation.
CRS395	Accounting Rule. Set	Configure for event FA10.
CRS405	FAM Function. Open	Configure function FA10.
FAS920	Settings - Extraordinary Depreciation
FAS040 FAS045	Column Template - Display FA. Open Column Template FA Value. Open	Create templates to allow the display and reporting of assets.
FAS100	FA Depreciation. Create Account Entries	Create a proposal, review, and update.
CRS630/E	Accounting Identity. Open	Set the F/A account field to 1-Fixed assets or 2-Fixed assets under construction. Set the VAT account type to 4.
CRS405	FAM Function. Open	FAM functions for supplier payments: AP20 and AP3x. To obtain an automatic deduction of cash discount from the FA, set the VAT mt cash dis field to 3.
FAS900	Settings - Fixed Asset Acquisition	Specify this information: Csh disc deduct To activate cash discount deduction, select this check box. Value type for cash discount Set the value type for cash discount. Deact per adj Check the company policy for additions. Review this parameter if additions or deductions must be put to the next open period or spread over the remaining open periods (life time).
FAS940	Settings - Activating FA under Construction	Set the accounting dimension for the project number for FA under construction.
FAS945	Settings - Fixed Asset Disposition	For fixed asset disposal, set the value types per depreciation method for disposal.
FAS920	Settings - Extraordinary Depreciation	For extraordinary depreciation, set the value types.
FAS915	Settings - Cost of Capital Calculation	For the cost of capital, set the base value type for calculation. Check whether history must be updated. If the functionality is used, it is optional.
FAS090	Cost of Capital Method. Open	Set the cost of capital rules for calculatory interest calculation. If the functionality is used, it is optional.
FAS002	Fixed Asset. Connect Depreciation Types	For depreciation types, specify this information: Below 0 For calculatory depreciation for cost accounting purposes, select this check box. Adjust deprectn Select this check box. Acq depr adj. If the half-year rule is required, set this field to 1-Mid-year. Deprectn method This field is usually set to 1-Linear depreciation.