Changing How Depreciation Is Calculated After You Have Processed Depreciation

After you run depreciation processing for an asset item, you may need to change or correct how depreciation has been calculated for it.

For example, you may have processed depreciation for an asset item for several months and now you need to add more or less cost to the depreciation basis, or change the asset item's useful life in years.

Vision allows you to make changes to the information on the GL Cost, GL Book, and Additional Books tabs in the Equipment Info Center that affect the depreciation calculation for an asset item. Then you can run or rerun depreciation processing in the current period, which calculates depreciation using the new information. Vision makes an adjusting calculation which, when added to the original calculation nets to the correct depreciation amount, makes the accumulated depreciation amount correct for the current period.

If the changes that you made apply to prior periods in which depreciation was already processed, Vision makes the depreciation adjustments for the prior periods and the current period all in the current period. Going forward in the next period, Vision uses the updated depreciation calculation.

When you add or remove cost to the depreciation basis for an asset item (in the Acquisition Cost grid on the GL Cost tab in the Equipment Info Center), the period that you enter in the grid for the cost controls the periods for which Vision makes adjusting calculations for the depreciation.

If you change the useful life in years for an asset item on the GL Book tab in the Equipment Info Center and then rerun depreciation processing in the current period, Vision recalculates depreciation for each prior period in which depreciation was calculated. An adjustment is made for depreciation for the prior periods in the current period so that the accumulated depreciation amount is correct in the current period.

Example

1. In January, you entered the following information for an asset item in the Equipment Info Center:
   • Depreciation basis = $1,200.
   • Useful life in years = 1.
   • In-service date = January 1.

   The monthly depreciation that Vision calculates when you run depreciation processing for the asset item is $100 each month for 12 months starting in January.

2. You process depreciation for the asset item in January, February, and March. The depreciation posted for each month was $100. Total accumulated depreciation in March is $300.
3. After you ran depreciation processing in March (the current period), you enter an additional cost of $1,200 for the asset item on the Acquisition Cost grid on the GL Cost tab in the Equipment Info Center.

   The cost should have been included in the depreciation calculation starting in January, so you enter January in the Period field in the grid for the additional cost.

   Now the depreciation basis is $2,400, and the monthly depreciation should be $200 each month for 12 months, starting with January.

4. You rerun depreciation processing in March (the current period).
   Vision calculates the following depreciation amounts:

   • $100 for March, which when added to the $100 already calculated in March, makes a total of $200 for March's depreciation.
   • $100 for February, which when added to the $100 already calculated in February, makes a total of $200 for February's depreciation.
   • $100 for January, which when added to the $100 already calculated in January, makes a total of $200 for January's depreciation.
5. You run depreciation processing for the asset item in April and for the remaining months of the year. The depreciation amount that is calculated in each month is $200.

An alternative to having Vision make the correcting depreciation entry in March would be to first rerun depreciation processing in January and February, and then in March. In each period, the adjusting amount of $100 would be posted for depreciation.

If you had added the additional acquisition cost in March before running depreciation processing in March, Vision would have made the following depreciation calculations during depreciation processing in March: $200 for March, $100 for February, and $100 for January.