Running the Reduction Depreciation

If you are using enhanced depreciation, you might need to apply the reduction depreciation to certain fixed assets. This reduces the amount of ordinary depreciation by a percentage you specify, during a particular year of an asset's useful life. When a reduction depreciation is applied to an asset for a certain year, there can be no advanced depreciation for the asset in that year. Standard depreciation is posted during all the periods of the year (normally 12), and then in the last period the reduction depreciation posts a separate transaction in the normal asset accounts (balance sheet and profit and loss).

Before running the reduction depreciation, use Fixed Asset Reduction Depreciation Selection (FDR) to determine which assets are to be included in the reduction and the percentage by which their depreciation rate is to be reduced, or alternatively set the percentages manually in Asset Records (FAS). Use Asset Reduction Depreciation Calculation (FAR) to calculate and post the reduction.

In addition to consolidation, you can also use Business Rules to set or validate analysis codes on the generated transactions. To do this, create an Event Profile that checks for a Function Code of Asset Advanced/Reduction Depreciation Calculation, and use a Call Point of either 00015 Populate or 00016 Validate Analysis on System Generated Transactions.

  • If you use both Consolidation and Business Rules for this function, the analysis codes validated and set by Business Rules are definitive, and if different, override the codes set (or removed) by Consolidation. This is because the Business Rules operate after the Consolidation process finishes setting analysis codes on the generated transactions.
  • If a transaction fails validation by a business rule using call points 0015 or 0016, by default the error message is not shown in the transaction report. This is because it is not included in the SunSystems sample reports; therefore, to show the details of such analysis code validation, you must add an appropriate column for this to the asset depreciation transaction report.
  1. Specify this information:
    Asset Class From/To
    The asset class, or the range of asset classes, to be processed. Leave this blank either to select all assets, or if you want to select specific asset codes in the field below.
    Asset Code From/To
    The asset code, or range of asset codes, on which to perform the reduction depreciation. Leave these fields blank to include all assets that have percentage specified in the % Current Year Reduction option in Asset Records.
    Analysis Dimension
    The asset analysis dimension to be used to select assets. Leave this blank to include all assets that have percentage specified in the % Current Year Reduction option in Asset Records, regardless of the analysis dimensions.
    Analysis Code From/To
    If an Analysis Dimension has been chosen as the selection criterion above, this analysis code or range of codes is used to select the assets. Only assets that reference one of these codes in the chosen analysis dimension are selected for reduction depreciation.
    Depreciation Period
    Enter the last period of the current year.
    Post Transactions
    If you wish to report on the reduction depreciation calculations without posting them, select No. Select Yes to calculate and post the reduction depreciation. If provisional postings are mandatory or optional, you can select Post Provisional to post the transactions as provisional transactions. A reduction depreciation report is always produced.
    Posting Period
    Select Single to post all of the calculated depreciation reduction to the period specified in the Depreciation Period field. Select Historic to post the calculated depreciation reduction to the period to which it relates.
    Suppress Transactions
    Select Yes if you only want to print the asset transactions generated during this run. Select No if all of the asset transactions are to be printed, including any previous depreciation and reduction depreciation, asset and disposal transactions.
    Balance Sheet
    The balance sheet depreciation account to which the reduction depreciation is posted. Normally, reduction depreciation is posted to the balance sheet account on the asset record in Asset Records. If this account is blank in Asset Records, then the account entered in this field is used.
    Note:  SunSystems does not check that the account entered is a Balance Sheet type account.
    Consolidate Profit and Loss
    Normally two postings are generated for each reduction depreciation calculation: one to the balance sheet accumulated depreciation account and the other to a profit and loss depreciation expense account. If this field is set to Yes, then you can specify how you want to consolidate the profit and loss postings.
  2. If you select Yes in the Consolidate Profit and Loss field, when you click OK the Depreciation Consolidation form is displayed. This allows you to define how you wish to consolidate the profit and loss depreciation transactions.
    Asset Code From/To
    Check the Asset Code check box to consolidate the profit and loss posting by asset code into one transaction line. You can specify the range of asset codes to be consolidated, or alternatively leave the From and To fields blank with the check box checked if you want all asset codes to be consolidated.
    Analysis Dimension
    For each analysis dimension, check the check box to consolidate the profit and loss posting by that analysis dimension into one transaction line. You can specify the range of analysis codes to be consolidated, or alternatively leave the From and To fields blank with the check box checked if you want all analysis codes for that dimension to be consolidated. Additionally, analysis codes are removed if the analysis is not allowed for the relevant depreciation account.
    Note:  If you consolidate asset codes and/or analysis codes then those codes are not included on the consolidated transaction line.
  3. Save your changes.