CALCULATE DEPRECIATION - Special Topic FA-3

Several system and depreciation method-specific options affect the computation of depreciation. You should make the decisions regarding the basic methodology used at your company and the system configuration(s) that support your company policies before you initialize Costpoint Fixed Assets. Configuration changes made after initialization, although permitted by the system, should be made with caution to avoid unexpected results.

Select System-Wide Method for Computing Depreciation

In the Fixed Assets Settings screen, you can select one of two system-wide methods for computing depreciation "Catch-Up" amounts for prior periods missed in a current year (purchase year or fiscal year, as applicable). You can:

1. SPREAD the "Catch-Up" amount among the remaining periods in the purchase year or fiscal year, as applicable.

2. ADD the "Catch-Up" amount to the amount computed for the current period.

These two system options are available for use regardless of the basis that you assign to a depreciation method (Date of Purchase or Fiscal Year). The default configuration for these options is to spread the "Catch-Up" amount among the remaining periods.

Use of "Catch-Up" System-Wide Configuration for Depr Calculations

In the Fixed Assets Settings screen, you can specify whether the system should "catch up" the calculation of any delayed current year depreciation in the remaining periods of the purchase or fiscal year (as applicable with your depreciation methods) or in the current period.

Note:  Regardless of your selection, this configuration option is NOT designed for historical "catch-up" calculations during the initialization of your asset records. It is designed to help you on an ongoing basis for new records, in cases when you were not able to begin depreciation at the proper time in the current fiscal year or purchase year.

"Catch-Up" depreciation calculations in the current depreciation year (PY or FY) will correctly compute the current depreciation amount on a "catch-up" basis in the current accounting period, based on the Depr Start Date entered for the Asset Master record. For new records, the system automatically increment the value in the Days/Pds Remaining field on a "catch-up" basis when depreciation first calculates for the record.

Example 1: Your current accounting period is April, and the asset record should have been added two periods ago in February. If you use the "catch-up" configuration add option, you should initialize the Depr Start Date with the date in the February period when depreciation should have begun.  (If you are using no other methodology, we recommend using the first day of the current accounting period.) When you compute depreciation for the first time for this record, the system inserts the correct data in the Curr Depr Yr and Days/Pds Remaining fields, just as if the asset had been added correctly in February, but effective as of the current period. For this example, the system computes the amount of depreciation for February, March, and April (the current period) and displays the three-month total in the Current Pd Depreciation field. In this manner, the system will "catch up" previously missed amounts beginning with the period associated with the Depr Start Date in the current year (PY or FY) through the current period, all at once, in the current accounting period. The system computes depreciation only for a single period the next accounting period, because the record has already been "caught up" and is back on track.

Note:  If you find that the "catch-up" depreciation amount is an unexpectedly large amount, you can always override the system-wide "catch-up" calculation on an asset-by-asset basis so that the missed periods are spread over the remaining periods in the purchase year or fiscal year.

Example 2: Your current accounting period is April, and the asset record should have been added two periods ago in February. If you use the "catch-up" configuration spread option, you should still initialize the Depr Start Date with the date in the February period when depreciation should have begun. When you compute depreciation for the first time for this record, however, the system will still insert the correct data in the Curr Depr Yr and Days/Pds Remaining fields as of February, just as if the asset had been added correctly in February. For this example, however, when you compute depreciation, the system will evenly spread the missed depreciation amounts for February and March among the remaining periods in the purchase year or fiscal year and ,display this amount in the Current Pd Depreciation field.

Note:  The system default for this configuration option is to spread missed depreciation among remaining periods in the current PY or FY, as applicable; this option is the most conservative and smooths depreciation expense for the remainder of the year. 

Make changes to configuration options after initialization with extreme caution. If you change this option once you have begun computing and posting depreciation, the system will compute annual depreciation correctly, but the spread of the total annual depreciation may be affected, however, and extensive editing of the individual asset records may also be required.

Set Configuration for Computing Depreciation Based on Periods or Days for Date of Purchase Methods

In the Fixed Assets Settings screen, you can select one of two system methods for computing current period depreciation. You can:

1. Compute depreciation based on the number of periods in the purchase year.

2. Compute depreciation based on the actual number of days "owned" for the period.

When you establish each depreciation method in the Depr Methods - Basic Setup screen, you must specify whether the method uses the Date of Purchase or Fiscal Year basis. If you have specified a Date of Purchase basis depreciation method for use in any book in an Asset Master record, you must ALSO specify the system configuration to use during calculations.

Note: YOU SHOULD DECIDE ON THE CONFIGURATION FOR USE AT YOUR COMPANY BEFORE INITIALIZATION. If you change the configuration after depreciation has been computed, subsequent depreciation calculations will be incorrect. In this circumstance, to ensure that future calculations will be correct after changing this configuration, you may need to manually edit the Days/Pds Remaining field for EACH affected asset master record.

The two system configuration options for the calculation of Date of Purchase basis current period depreciation are based on:

• The number of periods in a purchase year.

If you select this option, the system will spread annual depreciation evenly throughout the purchase year, based whether or not you have selected the Number of periods in purchase year radio button. Unless you have made changes to key fields used in the computation, this option will compute consistent current period depreciation values from period-to-period across the purchase year among periods that may contain inconsistent numbers of days.

Almost all users select this option, which is simpler to administer and maintain.

• The actual number of days "owned" in each period.

If you select this option, the system will compute current period depreciation based on the actual number of days in the current period. This option will compute varying current period depreciation values from period-to-period across the purchase year, depending on the number of days in each "current period." (For this configuration, the system uses a standard value of 365 days in a year (366 for a leap year) for calculations.) 

Few users select this option, which is far more time-consuming to administer and maintain.

Note:  The default configuration for these options is to compute depreciation evenly based on the number of periods in a purchase year. (Most companies use the default configuration.) You can change the default configuration so that depreciation is based on the actual number of days "owned" in each period, but any such change should always be made before initialization.

Set Up Fiscal Year/Pd/Subpd Data in Costpoint General Ledger and Fiscal Year/Accounting Period Data in Costpoint Fixed Assets

Costpoint General Ledger: Fiscal Years, Accounting Periods, and Subperiods

Regardless of the Date of Purchase or Fiscal Year basis assigned to any depreciation method, you must set up all FY/Pd/Subpd data in Costpoint General Ledger for at least the current fiscal year. You should, at a minimum, enter data for the current fiscal year and data for the next two future fiscal years in Costpoint Fixed Assets to enable current period depreciation expense calculations.

During the Fixed Assets posting process, the system always validates data in the Posting Settings screen against the FY/Pd/Subpd General Ledger data.  

Costpoint Fixed Assets: Fiscal Years and Accounting Periods

The FA FY/Pd Settings menu consists of three screen selections, as follows: 

• Maintain FA Fiscal Years

• Maintain FA Accounting Periods

• Update FA FY/Pd Info from GL FY/Pd Info

The system uses data from these screens to compute depreciation expense for the current accounting period and for future accounting periods. The Verify/Update Depr Computation Data utility also uses data from these screens to compute values for the Curr Depr Yr and Days/Pds Remaining fields in the Asset Master records.  (During the Fixed Assets posting process, however, the system always validates data in the Posting Settings screen against FY/Pd/Subpd data in the General Ledger.)

The system uses future fiscal year/period data for both current and future period depreciation calculations.

If you also enter historical fiscal year/period data in these screens, you can use the Verify/Update Depr Computation Data utility to verify (and optionally update) the Curr Depr Yr and Days/Pds Remaining fields of your historical assets based on the Depr Start Date. Regardless of the Date of Purchase or Fiscal Year basis assigned to any depreciation method, you should, at a minimum, enter data for the current fiscal year and data for the next two future fiscal years in Costpoint Fixed Assets to enable current period depreciation expense calculations.

To use the projections functionality, you should add fiscal year/accounting period data for each future year for which you will compute projected depreciation expense.

You can manually enter this data in the Maintain FA Fiscal Years screen and the Maintain FA Accounting Periods screen. Alternately, you can use the optional Update FA FY/Pd Info from GL FY/Pd Info process to automatically populate these screens with fiscal year/accounting period data already existing in Costpoint General Ledger.

It is likely, however, that you will have only the current fiscal year and accounting periods established in Costpoint General Ledger. In this event, you should manually enter data for the next two future fiscal years in the Maintain FA Fiscal Years screen and the Maintain FA Accounting Periods screen. When data for the fiscal year and accounting periods is set up in Costpoint General Ledger (after it has been established in Costpoint Fixed Assets), make sure that you review the parallel data in Fixed Assets to ensure that there are no discrepancies.

Note:   The process run from the Close Fixed Assets Acctng Pd Screen can automatically update the Maintain FA Fiscal Years and Maintain FA Accounting Periods screens under specific circumstances. If the period being closed is the last period of the current Fixed Assets fiscal year (see the Posting Settings screen) and the next fiscal year and accounting periods are already set up in Costpoint General Ledger, the system will automatically import the next fiscal year data from the GL to the Maintain FA Fiscal Years screen. Additionally, the system will automatically import the GL accounting periods and period ending dates for that fiscal year from the GL to the Maintain FA Accounting Periods screen.

Warning: Regardless of the basis for depreciation (Date of Purchase or Fiscal Year) linked with the depreciation methods used at your company, you must set up FA FY/Pd data as part of your initialization procedures before you compute depreciation for the first time. (This step is required even if you use only Date of Purchase basis depreciation methods at your company.)

If you do not establish the Fixed Assets FY/Pd data before computing depreciation, incorrect data displays in the Current Pd Depreciation fields(s) of the G/L Book Info and Other Books Info subtasks of the Maintain Asset Master Info screen (and in the Maintain Asset G/L Book Info and Maintain Asset Other Books Info screens) after depreciation is computed for new records.

In addition, blanks display in the report produced by running the Verify/Update Depr Computation Data utility (in the Curr Depr Yr and Days/Pds Remaining fields) for any record for which no corresponding FY/Pd data is found relative to the Depr Start Date field.

Assign Date of Purchase or Fiscal Year Basis to Each Depreciation Method

You must assign a Date of Purchase or Fiscal Year basis for each depreciation method that you set up. The basis that you select for the depreciation method determines the specific formula that will be used to compute depreciation. Note that different formulas may be used within the same asset record, because depreciation methods are assigned on a book-by-book basis for each asset record.

Note: It is important that you decide on the BASIS for the depreciation methods that you assign to your Asset Master records BEFORE you compute depreciation for the first time. If you assign a different depreciation method that has a different basis to a record AFTER depreciation has begun, you will need to manually edit Asset Master fields on a record-by-record basis before computations will proceed correctly.

1. Date of Purchase Basis. When you assign a Date of Purchase basis depreciation method to any book in an Asset Master record, the depreciation year begins on the date of "purchase" (designated as the Depr Start Date field(s) of the G/L Book Info subtask and Other Books Info subtask, as applicable, of the Maintain Asset Master Info screen and in the Maintain Asset G/L Book Info and Maintain Asset Other Books Info screens) and continues for one year from the "purchase."  This purchase year timeframe always crosses fiscal years (except for assets purchased in the first month of the fiscal year).

2. Fiscal Year Basis. When you assign a Fiscal Year basis depreciation method to any book in an Asset Master record, the system allocates the full year's depreciation percentage within the current fiscal year, regardless of the period of acquisition. The annual depreciation computation will be the same, regardless of the period of acquisition within the fiscal year. (If you have set up a half-year convention with your depreciation method, the system still allocates the full year's depreciation percentage, but the percentage is usually halved in the first and last years.) 

The default configuration automatically associated with each depreciation method is the "Date of Purchase" basis. You can change the configuration to a "Fiscal Year" basis in the Depr Methods - Basic Setup screen, as desired. Once you have established the configuration and begun depreciating in the system, however, you cannot automatically change the depreciation method basis or assign a different depreciation method to an asset record without reviewing the need for manual edits on a record-by-record basis.

Other Factors that can Affect Depreciation Calculations

Data Entered for Depreciation Method

The data you enter for the depreciation method assigned to any book of an Asset Master record can also influence the calculation of depreciation. These factors can include data from the following fields in the Depr Methods - Basic Setup screen:

• Years of Useful Life field

• Total % to Depreciate field

• % Depreciation Per Year (Year field)

• Depreciation Basis Date of Purchase or Fiscal Year radio buttons (discussed in previous paragraphs)

• Subtract Salvage Value Before Calculation checkbox

Data Entered in Asset Master Record

The data you enter in an Asset Master record can also influence the calculation of depreciation. These factors can include data from the following fields, as applicable:

From the Maintain Asset Master Info main screen (and in the Maintain Asset Desc Info screen):

• Depreciation Based on Years, Units of Usage, or Lease Pds radio buttons

From the Cost Info and Other Books Info subtasks of the Maintain Asset Master Info screen (and in the Maintain Asset Desc Info and Maintain Asset Other Books Info screens):

• Total Cost field

From G/L Book Info (Years, Units, Leases) and Other Books Info subtasks of the Maintain Asset Master Info screen (and in the Maintain Asset G/L Book Info and Maintain Asset Other Books Info screens):

Note: The list below contains field names as they appear in the Maintain Asset Master Info screen. Field names may vary between screens.

• Auto Calculate Depreciation checkbox

• Depr Method Code drop-down box

• Depr Start Date field

• Curr Depr Yr field

• Days/Pds Remaining field

• Amt Taken Purchase YTD (for Date of Purchase basis only) field

• Percent field (in Salvage group box in G/L Book Info subtasks)

• Value field (in Salvage group box in G/L Book Info subtasks)

• FYTD Depreciation field

• Prior FY Depreciation field

• Estimated Units Useful Life field (if depreciation is based on Units)

• Std Depr Rate Per Unit of Usage field (if depreciation is based on Units)

• Prior Units Used field (if depreciation is based on Units)

• Current Units Used field (if depreciation is based on Units)

• Total Lease Value field (if amortization is based on Lease Pds)

•  Monthly Payment field (if amortization is based on Lease Pds)

• Lease Payments Remaining field (if amortization is based on Lease Pds)

• Amortization Start Date field (if amortization is based on Lease Pds)

• FYTD Amortization field (if amortization is based on Lease Pds)

• Prior FY Amortization field (if amortization is based on Lease Pds)

Rounding

You may find occasional minor rounding differences (a few cents) in depreciation amounts calculated, even in methodology designed to be consistent from period-to-period.

Due to rounding differences, the system may need to add or deduct a few pennies from the depreciation expense calculated for the last period in each depreciation year (purchase year or fiscal year, as applicable). This procedure ensures that the sum of the depreciation expense calculated for the periods within a depreciation year exactly equals the annual depreciation.

Curr Depr Yr and Days/Pds Remaining Fields

These two important fields in the Book Info (Years) subtask (and the Other Books Info subtask, as applicable) of the Maintain Asset Master Info screen (and in the Maintain Asset G/L Book Info and Maintain Asset Other Books Info screens) are used by the system during depreciation computations.

For new records, leave these fields blank so the system can automatically drop in the correct values during the first depreciation calculation. The values inserted by the system into these fields are based on data in the Depr Start Date field, as well as the configuration option selected for depreciation calculations in the Fixed Assets Settings screen ("catch-up" calculations added to the current period amount or spread among the remaining periods in the PY or FY). If you use Date of Purchase basis depreciation methods based on periods, the system will also read the Pds in DP Year field in the Maintain FA Fiscal Years screen to determine how many periods should be inserted into the Days/Pds Remaining field at the start of each new purchase year.

For existing records that already have depreciation history (that are not being depreciated for the first time in Costpoint), you must initialize these fields correctly to ensure that ongoing depreciation calculations are correct.

Curr Depr Yr

The value in this field signifies which depreciation year of the asset's total useful life is current. With this data, the system can use the appropriate percentage for the current year of life from the depreciation method linked with this record. (Years of useful life and percentages for each year are set up in the Depr Methods - Basic Setup screen.)

Note:  The Useful Life field(s) in the G/L Book Info (Years) subtask (and the Other Books Info subtask, as applicable) of the Maintain Asset Master Info screen (and in the Maintain Asset G/L Book Info and Maintain Asset Other Books Info screens) are optional data fields ONLY, and are NOT used to calculate depreciation.

For new records, this field is blank. You should not normally enter a value in this field for new records. When depreciation is calculated for the first time, the system will automatically insert "1" in this field, because all new records are in the first year of depreciation upon initialization.

Note:  If you have entered any value in this field, the system will NOT replace your entry when calculating depreciation.

When initializing your historical records, you will need to enter the correct current depreciation year for each asset. If, for example, you have an asset for which you have defined a depreciation method with a useful life of five (5) years (in the Depr Methods - Basic Setup screen), you should enter the current year of that life (e.g., "1," "2," "3," "4," or "5."). In this way, the proper depreciation percentage for the current depreciation year will be used during system depreciation calculations.

For both new and historical records, once this field is initialized (either by the system or manually), the system automatically increments the value in the Curr Depr Yr field at the appropriate time for each record (within the limits of the useful life defined in the assigned depreciation method). The field is incremented, as appropriate, during the Close Fixed Assets Acctng Pd process in Costpoint Fixed Assets.

During the Close Fixed Assets Acctng Pd process, the system compares the value in the Curr Depr Yr field with the last year of useful life from the depreciation method code attached to the Asset Master record. If there is a match AND the value in the Days/Pds Remaining field is equal to "1," the system does NOT increment the value in the Curr Depr Yr field, but instead changes it to "0" (along with the value in the Days/Pds Remaining field).  This condition signifies that the asset has reached the end of its useful life as defined in its depreciation method.

The system will automatically increment the value in the Curr Depr Yr field at the appropriate time ONLY IF the value in the Days/Pds Remaining field is equal to "1" (for depreciation based on periods) or is less than or equal to the number of days in the period being closed (for Date of Purchase depreciation based on days) and the value in the Curr Depr Yr field is less than the useful life specified in the depreciation method. (During the Close Fixed Assets Acctng Pd process in Costpoint Fixed Assets, the system will also change the value in the Days/Pds Remaining field appropriately and automatically.)

This field is critical to the calculation of depreciation. Although you can edit the Curr Depr Yr field at any time, you should use caution if you change the current depreciation year for records once they have begun depreciating in the system.

Days/Pds Remaining

The value in this field indicates the number of periods or days remaining (as appropriate) in the current year of the asset's useful life. The system uses this value, among others, in the computation of depreciation.

Depending on the system-wide configuration decisions made for your company in the Fixed Assets Settings screen and whether the depreciation method assigned to each asset record uses the Date of Purchase or Fiscal Year basis, the value that displays in this field will be different:

• If you have linked a FY (Fiscal Year) basis depreciation method with a record, the value in this field should reflect the number of accounting periods remaining in the current fiscal year (including the current period).

• If you have linked a DP (Date of Purchase) basis depreciation method with a record AND you have selected the system-wide configuration in the Fixed Assets Settings screen that computes current period depreciation based on the number of periods in a purchase year, the value in this field should reflect the number of accounting periods remaining in the current purchase year (including the current period).

• If you use Date of Purchase basis depreciation methods based on periods, the system also reads the Pds in DP Year column in the Maintain FA Fiscal Years screen to determine how many periods should be inserted into the Days/Pds Remaining field at the start of each new purchase year.

• If you have linked a DP (Date of Purchase) basis depreciation method with a record AND you have selected the System-Wide configuration in the Fixed Assets Settings screen that computes current period depreciation based on the number of days "owned" in each period, the value in this field should reflect the number of days remaining in the current purchase year (including the current period).

For new records, blanks display in this field. You should not enter a value in this field for new records. When depreciation is calculated for the first time, the system will automatically insert the correct number of periods or days, as appropriate, in this field.

If you use Date of Purchase basis depreciation methods based on periods, the system will also read the Number of Periods in Purchase Year column in the Maintain FA Fiscal Years screen to determine how many periods should be inserted into the Days/Pds Remaining field at the start of each new purchase year.

Note:  If you have entered any value in this field, the system will NOT replace your entry when calculating depreciation.

When initializing your historical records, you will need to enter the correct number of periods or days, as appropriate, in the field. For both new and historical records, once this field is initialized (either by the system or manually), the system automatically decrements the value in the Days/Pds Remaining field during the Close Fixed Assets Acctng Pd process.

The system will automatically increment the value in the Curr Depr Yr field if the value in the Days/Pds Remaining field is equal to "1" (for depreciation based on periods) OR is less than or equal to the number of days in the period being closed (for Date of Purchase depreciation based on days) and the value in the Curr Depr Yr field is less than the useful life specified in the depreciation method.

At the same time, the value in the Days/Pds Remaining field will reset to the number of periods or days in the next fiscal or purchase year, as appropriate.

This field is critical to the calculation of depreciation. Although you can edit the Days/Pds Remaining field at any time, you should use caution if you change the days/periods remaining for records once they have begun depreciating in the system.

For more detailed information on Date of Purchase and Fiscal Year depreciation calculations using different system configurations, please refer to the examples that follow in this special topic.

Verify/Update Depr Computation Data Utility

The Verify/Update Depr Computation Data utility was developed to assist you in verifying the relationship of the Depr Start Date field to the Curr Depr Yr and Days/Pds Remaining fields. The relationship between these fields and the Depr Start Date is critical to the accurate calculation of depreciation.

Note: All values computed by the system in this utility are based on the assumption that the value in the Depr Start Date field is correct. The system displays its own computation, based on the Depr Start Date value, for the Curr Depr Yr and Days/Pds Remaining fields as well as existing data for these fields from the Asset Master record. The system will never overwrite any manually entered data already existing in the Curr Depr Yr and Days/Pds Remaining fields unless you run the Update portion of the utility.

You can run this utility for one asset/item number, a range of asset/item numbers, or all asset/item numbers. The system prints a report by asset/item number, by book, based on the depreciation start date, that includes a side-by-side comparison of both the current values displayed in the Asset Master and system-computed the values for the Curr Depr Yr and Days/Pds Remaining fields, based on the data in the Depr Start Date field.

Although you can print this report for all selected records, you can also print the report for exceptions only, which may make discrepancies easier to identify. After the report has printed, you may decide to activate the option in this utility that applies the system-computed values to your asset records. The update portion of the process updates the existing data in the Curr Depr Yr and Days/Pds Remaining fields in the Asset Master record by replacing your data and writing the system-computed values to these fields. Please refer to the specific documentation for this utility for additional operational information.

If you choose not to apply the system-computed values, you may need to manually adjust some values in the Curr Depr Yr and Days/Pds Remaining fields or, in some cases, the Depr Start Date field, to ensure the accuracy of depreciation calculations.

Warning: Because the Update portion of this utility will overwrite your existing data with system-generated data, you should always carefully review and agree with the reported results on a record-by-record basis before performing the Update process. (Note that the Update process is similar to posting routines in that you must first print the report before you can proceed with the Update process.) Never run the Update process as a matter of routine unless you are in agreement with the system data field changes that will take place for each Asset Master record. As an additional safeguard, ensure that a timely data backup has been performed.

This utility is designed as a diagnostic tool rather than a sophisticated system program. Note that fully depreciated records will also print as exceptions in the report. If you have named your depreciation method codes logically, however, it should be easy to match your codes against depreciation start dates in order to eliminate these records from the valid exceptions.

Because fully depreciated records will also print as exceptions on the report, you may find that you do not want to apply all the system-computed values to your asset records. In this event, you can use the system-generated report to guide you in manually adjusting the values in the Curr Depr Yr, Days/Pds Remaining, and/or, in some cases, the Depr Start Date fields.

Note, however, that if you have carefully reviewed and agree with the system-computed changes for assets that are NOT fully depreciated, there will be no harm in also updating the system-computed changes for fully depreciated assets.

Under normal circumstances, when an asset is fully depreciated and the last period of life for the asset is closed, the values in the Curr Depr Yr and the Days/Pds Remaining fields automatically change to "0" and display as such in the G/L Book Info (Years) and Other Books Info subtasks of the Maintain Asset Master Info screen (and in the Maintain Asset G/L Book Info and Maintain Asset Other Books Info screens).

Note: During the Close Fixed Assets Acctng Pd process, the system compares the value in the Curr Depr Yr field with the last year of useful life from the depreciation method code attached to the Asset Master record. If there is a match AND the value in the Days/Pds Remaining field is equal to "1," the system does NOT increment the value in the Curr Depr Yr field, but instead changes it to "0" (along with the value in the Days/Pds Remaining field.)  This condition signifies that the asset has reached the end of its useful life as defined in its depreciation method.

When you update a fully depreciated record with this utility, the Update process will replace the zeroes in these fields with system-computed values based on the Depr Start Date field. If there is no book value remaining, however, the system will never compute additional depreciation, regardless of the values in the Curr Depr Yr and the Days/Pds Remaining fields.

You must print the Verify/Update Depr Computation Data Report before you can run the Update process. You can print the report for all selected records or for exceptions only. This report provides supporting detail to the Update process and should be retained as part of the system audit trail.

Either version of the report prints columns for the following data:

Asset Master Record Data

• Asset No/Item No

• Short Description

• Book No

• Depr Method Code

• Depr Start Date

• Curr Depr Yr

• Days/Pds Remaining

Values Computed by System

• Curr Depr Yr

• Days/Pds Remaining

Although you must print the Verify/Update Depr Computation Data Report before you can run the Update process, you can also print the report without updating so that you can review the data first. If you exit from the selection screen or change your selections, however, you must print the report again before you can run the Update process.

You should run this utility to verify and/or update your data after you initialize your historical records, after you reconcile the detail Asset Account and Accumulated Depreciation Account values with your General Ledger, but before you compute depreciation for the first time.

After initialization, you may want to run this utility on a regular basis each period as part of your company's standard procedures, to confirm that your period additions have been initialized correctly.

Note that the same validations and rules by which depreciation is computed are followed in this report. For example, any record in which the Auto Calculate Depreciation checkbox is selected will not be included in the report, just as any such record will be skipped during depreciation calculations.

Verify/Update Amt Taken Purchase YTD

Use the Verify/Update Amt Taken Purchase YTD utility to verify the relationship of the value in the Amt Taken Purchase YTD field against the values in the Curr Depr Yr and Days/Pds Remaining fields. Initialization data in the Amt Taken Purchase YTD field is critical to the accurate calculation of depreciation, as is the data in the Curr Depr Yr and Days/Pds Remaining fields. Historical data entry in the Amt Taken Purchase YTD field in Asset Master records is particularly prone to error due to misinterpretation of the system "rules" for this field and/or because of missing/inadequate historical data.

Note:  This utility will verify/update Asset Master data only for books in which the assigned depreciation method uses a Date of Purchase basis and whose depreciation start date is before the current Fixed Assets posting FY, Pd, and Subpd.  [For assets in the first period of a purchase year, the system will automatically display the Amount Taken Purchase YTD value as zero].

The verify and update portions of this utility follow methodologies similar to those in the Verify/Update Depr Computation utility, except that this utility computes and compares values in the Amt Taken Purchase YTD field in Asset Master records, instead of the Curr Depr Yr and Days/Pds Remaining fields.

For new Asset Master records, the system will automatically initialize and update the values in the Amt Taken Purchase YTD fields in Asset Master (provided you have not entered data in these fields) when you close the current accounting period.

For additional information, please refer to the specific documentation for the Amt Taken Purchase YTD field for the G/L Book Info subtask of the Maintain Asset Master Info screen.

Warning: Because the Update portion of this utility will overwrite your existing data with system-generated data, you should always carefully review and agree with the reported results on a record-by-record basis before performing the Update process.

The Update process is similar to posting routines in that you must print the report before you can continue with the Update process. Never run the Update process as a matter of routine unless you are in agreement with the system field changes that will take place for each Asset Master record.

Depreciation Calculation Example 1

(Asset acquired at the beginning of the fiscal year using Fiscal Year basis.)

System-Wide Configuration: Spread "Catch-Up" among Remaining Periods in FY

 Basic Formula:

Depreciation Calculation Example 2

(Asset acquired in the middle of the fiscal year using Fiscal Year basis.)

Basic Formula:

Depreciation Calculation Example 3

(Asset acquired in middle of fiscal year using Fiscal Year basis.)

System-Wide Configuration:  Spread "Catch-Up" among Remaining Periods in FY

Basic Formula:

Depreciation Calculation Example 4

(Asset acquired at beginning of fiscal year using Fiscal Year basis. Record added in middle of FY with "Catch-up" spread over remaining periods.)

Basic Formula:

In this example, the annual depreciation of $ 2,400 is still expensed in the fiscal year. The annual depreciation, however, is spread over fewer periods in the fiscal year (five). If the depreciation for the asset had been properly entered when the asset was acquired in period 1, the annual depreciation would have instead have been spread over 12 periods.

Examples 1 - 4 each illustrates depreciation calculations using a Fiscal Year basis, with "Catch-Up" depreciation spread among the remaining periods in the fiscal year. Although this methodology is designed to produce consistent depreciation calculations from period-to-period, you may notice occasional minor rounding differences (a few cents) in one or more periods.

If you have configured the system to use the actual number of days per year or some other number that you specify, note that there is no change in the basic formula used to compute depreciation. There may, however, be period-by-period fluctuations in the computed depreciation amount, based on the fluctuating numbers of days per period.

Depreciation Calculation Example 5

(Asset acquired at the beginning of the fiscal year using a Fiscal Year basis. Record was added in the middle of the fiscal year with "Catch-up" applied in current period.)

Basic Formula:

User Forgets to Enter Asset From Periods 1-7; Enters Asset Period 8 for First Time

Depreciation Calculation Example 6

Asset acquired in middle of purchase year (which falls in middle of fiscal year) using Date of Purchase basis. Date of Purchase method based on Periods.

Basic Formula:

Note: After sixth period in purchase year, purchase year crosses fiscal years.

End of Purchase Year 1 - Begin Purchase Year 2

Depreciation Calculation Example 7

(Asset was acquired 10 periods into fiscal year using Date of Purchase basis. Date of Purchase method based on Periods. Asset was entered three periods "late" (after purchase) with "Catch-Up" depreciation applied in current period.)

Basic Formula:

User Misses First Three Periods in Purchase Year

Note: After the sixth period in purchase year, purchase year crosses fiscal year.

Depreciation Calculation Example 8

Asset acquired at beginning of accounting period in middle of fiscal year using Date of Purchase basis. Date of Purchase method based on Days.

End Of Purchase Year 1- Begin Purchase Year 2

ETC.

Basic Formula:

End Of Purchase Year 1 - Begin Purchase Year 2

ETC.

In this example, the system-wide default configuration in the Fixed Assets Settings screen has been used to "Catch-Up" any missed depreciation among the remaining periods of the purchase year. No periods are missed for this example, so there is no "Catch-Up" amount computed for any period.

The Date of Purchase configuration for this example has been changed from the default to use the actual number of days in each purchase year period. When this configuration option is selected, the Depr Start Date field in the G/L Book Info and Other Books Info subtasks of the Maintain Asset Master Info screen determines how many days will be used in the computation for the first period in the first purchase year. Because the Depr Start Date for this example is the first day of the period, the full number of days in the period was used to compute depreciation for the first purchase month.

Depreciation Calculation Example 9

Asset acquired in middle of accounting period using Date of Purchase basis. Date of Purchase method based on Days.

In this example, the system-wide default configuration in the Fixed Assets Settings screen has been used to "Catch-Up" any missed depreciation in the remaining periods of the purchase year. No periods are missed for this example, so there is no "Catch-Up" amount computed for any period.

The Date of Purchase configuration for this example has been changed from the default to use the actual number of days in each purchase year period. When this configuration option is selected, the Depr Start Date field in the G/L Book Info and Other Books Info subtasks of the Maintain Asset Master Info screen determines how many days will be used in the computation for the first accounting period in the first purchase year. Because the Depr Start Date for this example is the 15th day of the accounting period in the first purchase year, there are only 17 days "owned" (31 minus 14) for the first accounting period.

Note: 14 days for FY01 Pd 7 are calculated using the Year 1 depreciation percentage, because this represents the number of days remaining in Purchase Year 1 that are "owned" by this accounting period. Purchase Year 1 begins July 15, 2000 and ends July 14, 2001.

End of Purchase Year 1- Begin Purchase Year 2

Seventeen days in FY01 Pd are calculated using the Year 2 depreciation percentage, because this represents the number of days in Purchase year 2 that are "owned" by this accounting period (FY 01, Period 7). Purchase Year 2 begins July 15, 2001 and ends July 14, 2002.

Basic Formula:

For each year in the life of the asset, the accounting period in which the Depr Start Date anniversary falls affects the depreciation calculation. The system applies the previous depreciation year rate to the applicable number of days "owned" in the previous purchase year and applies the current depreciation year rate to the number of days "owned" in the current depreciation year. These two calculations are summed to derive the total depreciation for the current period.

1st 14 days (July 1, 2001 - July 14, 2001)

Begin Purchase Year 2

Next 17 days (July 15, 2001 - July 31, 2001)

In this example, in which the Depr Start Date does not coincide with the beginning of an accounting period and a Date of Purchase configuration based on Days is selected, a residual number of days will always be left over when the "official" life (in terms of accounting periods) is complete.

In this example, there is a two-year life consisting of 24 accounting periods. In the 24th accounting period, however, there are still 14 residual days remaining that have not been depreciated.

If you should browse this Asset Master record at this time, the Curr Depr Yr field will display "2" and the Pds/Days Remaining field will display "14." The system will not display a value in the Curr Depr Yr field that is greater than the life of the asset, even though the residual depreciation extends into the next accounting period.

In this circumstance, the number of accounting periods over which the asset is depreciated is 25 rather than 24, to accommodate the prorated portion that was excluded from the first purchase period.

Residual Amount:

14 days (July 1, 2002 - July 14, 2002)

Depreciation Calculation Example 10

(Asset acquired in middle of accounting period using Date of Purchase basis. Record added several periods later, with "Catch-up" depreciation applied in the current accounting period. Date of Purchase method based on Days.)

End Of Purchase Year 1 - Begin Purchase Year 2

Basic Formula:

Note: User should have entered asset in FY00, accounting period 7 (first period in purchase year), but forgets to do so. User enters asset for first time in accounting period 10, having skipped first three periods of purchase year 1.

This calculation combines the "Catch-Up" computation for the three missed periods with the computation for the current period.

End Of Purchase Year 1 - Begin Purchase Year 2

 ETC.