How are Assets Depreciated?

Depreciation can be calculated automatically in Depreciation Calculation (FDC).

It uses the depreciation method, the related asset details, and the current asset values to calculate the latest depreciation amounts for a selection of assets.

The range of assets to be depreciated is specified both by asset code, and/or asset analysis subcode. You can identify the period for which the depreciation is calculated and choose to report and/or post the depreciation amounts. The balance sheet account and profit & loss account to be updated is identified. The depreciation accounts specified for an asset in Asset Records (FAS) override the depreciation accounts you identify in Depreciation Calculation.

You can consolidate the depreciation transactions to minimize the number of postings. This consolidation can be done by asset code, and/or by any of the asset analysis codes.

Note:  Depreciation journals can be entered manually in Ledger Entry (LEN). These depreciation transactions must contain the Depreciation asset indicator.

Changing the Method of Depreciation

You can change the method or rate of depreciation for a given asset, part way through its life.

The Fixed Asset Register caters for this using Depreciation Tables. The depreciation table should be defined with entries that reflect the depreciation that has been generated to date. The new depreciation rates can be defined for future years.

If you are not using depreciation tables and you change the method of depreciation during the life of the asset, SunSystems recalculates the historic depreciation according to the new method and posts an adjustment depreciation transaction.

Depreciation Timing Rules

Depreciation timing rules can be applied to the depreciation calculations. This is required where depreciation is not spread evenly over each period in the year. The apportionment rules for the depreciation calculations is defined in Depreciation Timing Rules.

For example, if you have 13 accounting periods in a financial year the first 12 periods reflecting calendar months and the final thirteenth period holding year end adjustments, you only want to calculate depreciation for the 12 operational periods.

Depreciation timing rules allow you to specify the number of operational periods in your financial year and to specify how the annual depreciation charge should be split across these periods. You can also use this to account for periods of, for example, four or five weeks.