What Depreciation Methods are Available?
The SunSystems Fixed Asset Register provides six main depreciation methods and two enhanced methods, as follows:
Straight Line
Depreciation is calculated on the basis that each period should be charged the same amount of depreciation, over the asset's life. Assets are allowed a life of up to 100,000 years.
When start and end periods have been specified, Period Depreciation = (Rval / Rlife) x Depreciation Timing Rule ratio for the period.
When an end period is not specified but a percentage is given, then the percentage is used to calculate an end period. The same formula is applied.
Sum of Digits
This method applies a reducing fraction to the remaining value of the asset.
Period Depreciation = ( Rval * Rlife )/ Slife.
Declining Balance
Using this method a constant percentage is used to calculate the depreciation on the reducing book value of the asset.
Period Depreciation = Rval * Dp% /Periods per year.
Manual
Period depreciation is posted manually using Ledger Entry or Ledger Import. An asset indicator of Depreciation must be used to ensure the transaction updates the accumulated depreciation value(s) for the asset.
Depreciation Table
Depreciation is posted according to Depreciation Tables. The table states the percentages to be applied for each year of the asset's life.
Japanese
Period Depreciation = Erv / Erl
Uses the same calculation as Straight Line for its normal life and Erv/Erl for its extended life.
The depreciation method for an asset is defined in Asset Records (FAS) and the depreciation values are calculated periodically by Depreciation Calculation (FDC).
You can determine how depreciation calculation treats a final asset value recorded for the asset, and how it calculates the depreciation in the first depreciation period.
Assets can be maintained in up to three currencies: base currency, transaction currency and second base/reporting currency. Different depreciation methods and/or percentages can be used to calculate the depreciation in the base currency, transaction currency, and second base/reporting currency.
Advanced Depreciation
Advanced Depreciation is one of the elements of enhanced depreciation. If you are using straight line depreciation, you can multiply the ordinary depreciation amount by a factor during selected years of the asset's life. Both the multiplication factor and the term in years for which advanced depreciation applies are defined on each asset record using Asset Records. If you run Advanced Depreciation Calculation (FAA) in the last period of the year, the advanced depreciation amounts are posted to separate accounts, also defined in Asset Records.
Reduction Depreciation
Reduction Depreciation is one of the elements of enhanced depreciation. If you are using straight line depreciation, you can specify a percentage by which an asset's standard depreciation amount is to be reduced for a specific year. The reduction percentage is registered on the asset record in Asset Records. If you run Asset Reduction Depreciation Calculation (FAR) in the last period of the year, the reduction depreciation amounts are posted to the asset's standard depreciation accounts.
In any year, for a specific asset you can choose to use advanced depreciation or reduction depreciation, but never both in the same year. You do not have to use either.