Restart Asset Depreciation

[m_powell]

Hello list

Can someone please help with the following.

An asset was set up November 05 and was depreciating until April 06. It was set up in the AA with economic life of 120 months and the Method Computation "R" (Remaining Life) method. In the tax ledger, it was set up 36 months, Method Computation "C" (Current YTD) and 36 months.

In April 06, our Finance departmnet stopped depreciation on this asset. This was done using data selection on the depreciation calculation report.

It has now been decided that depreciation is to re-commence on this asset.

The issue is; how to start depreciation again without "catch up" depreciation being calculated.

I initially thought changing from R to P would suffice or just changing the deprection start date.

If anyone has any advice on this, I would really appreciate it.

Regards

Malcolm.

 

[askuodas]

Malcolm,



Will the asset continue to have the same useful life? If not could you
potentially change the life to a number that will give you the
depreciation expenses you need?



Adrian

 

[m_powell]

Re: RE: Restart Asset Depreciation

Hi Adrian

Thanks for that.

Will that prevent a catch up of depreciation if I were to reduce the economic life (reduce its life by 12 months for example)?

Thanks

Malcolm

 

[joelsandberg]

You need to understand exactly how the system is calculating depreciation to make the necessary adjustments. There are ways of tweaking your data and depreciation rules to make the calculation work, but all require an undesireable level of intervention and user sophistication.

Depreciation is calculated so that the asset cost basis is expensed over the life of the asset. In the case of Computation Method "R", the amount to calculate is based on the remaining months - the total amount to be depreciated will be spread over the future months, but you will still end up a total accumulated depreciation equal to the asset cost basis as of the depreciation end date. In order to "pick up where you left off", you will need to change the life months (and set up the necessary depreciation rule) to add the number of months that the asset was not depreciated, so that the asset has the same number of remaining months as it had when it stopped being depreciated.

In the second case, where Method of computation equals "C" current year, the system will calculate the depreciation for 2007 (including Jan through March), but will not calculate for the last nine months of 2006. However, when the asset reaches its total life months in November 2008, there will be a remaining net book value that will not be depreciated since the asset has reached the end of its depreciable life, unless its asset life is extended (and a depreciation rule is set up for the new asset life).

You may be tempted to try changing the placed in service date of the asset. I can't say so definitively, but I am pretty sure that the system will not let you do this once you have recorded depreciation. And, this would create a whole lot of manual tracking and audit issues (why is the in-service date different? How do you keep track of both the original and revised in-service dates?)

For obvious reasons, I strongly discourage clients from trying to prevent catch-up when depreciating assets. The exceptions this practice generates must be monitored and tweaked manually, and it opens up a whole slew of audit issues.

 

[m_powell]

Hi Joel

Thanks for the reply.

Still testing ways of doing this and it looks like splitting the asset to create a new asset with a relation to the original is looking like a possible solution.

Regards

Malcolm