Configuring Depreciation of Fixed Assets

Outcome

Rules controlling the creation of depreciation plans are defined for each FA type. Also, rules for extraordinary depreciation are defined.

The rules are automatically applied when entering an asset and are totally or partially applied when selling, disposing of, dividing, or splitting an asset.

For further information, see the documents listed in the See Also section.

Before you start

The company must have a plan for managing fixed assets.

Follow these steps

Follow the steps below to configure depreciation for fixed assets.

1. Create Depreciation Type

   Define the basic categories of depreciation, so-called depreciation types, in 'FA Depreciation Type. Open' (FAS050/B). These types are used to control, among other things, the period range (for example, quarterly or monthly depreciation) and the depreciation start date.

2. Create Depreciation Template

   To use the double declining method, which is based on declining balance, you must define a factor (coefficient). The factor is defined in 'Depreciation Template. Open for Declining Depreciation' (FAS025).

3. Create User-defined Depreciation Plan

   To use a customized depreciation plan by the company, you can create it in 'FA Depreciation Plan. Open' (FAS055). The lifetime of the asset is specified, as well as a percentage.

   To use a non-M3 calculated depreciation plan by the company, you must select the 'External' check box. Then you can upload and update the depreciation plan through FAS010MI without control over the amounts.

4. Connect Depreciation Type to Fixed Asset Type

   Connect a depreciation type to a fixed asset type in 'FA Type. Connect Depreciation Types' (FAS077). You can then configure each depreciation type further, including defining which of the three main methods for depreciation to use: linear, declining balance, or user-defined depreciation. You can also select variants of these.

5. Configure Extraordinary Depreciation

   To enable extraordinary depreciation, select a value type for the depreciated amount and how it continues when the depreciation is made. This is defined in 'Settings - Extraordinary Depreciation' (FAS920).