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.

Ordinary depreciation is straight line and covers a period of 4 to 50 years, depending on the asset type. Assets below a certain capital value can be fully depreciated to 100% in the year of acquisition. This limit on asset value for capitalization is determined on a company-by-company basis.

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.

The linear depreciation method and the declining depreciation method are handled by M3, in accordance with the applicable laws in this country.

Configuration guidelines

Program ID	Program name	Description or comment
FAS050	FA Depreciation Type. Open	Connection with Fixed Asset Type.
FAS060	FA Value Type. Open	Connection with Fixed Asset Type.
FAS070	FA Location. Open	Connection with Fixed Asset Type.
FAS080	FA Group. Open	Connection with Fixed Asset Type.
FAS075	FA Type. Open
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 it.