Depreciation Setting

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Assuming your company purchased a new fixed asset (see Fig 1) or if an existing asset with some months (years)  being previously depreciated. (see Fig 2)
 
Step : 1.4 Enter the following information as shown below.

Follow the steps below from 1.4.1 to 1.4.13

1.Depreciation Method*: Choose from the 3 method, Straight line, Sum of Digit or Double reducing balance (Mandatory field)
2.Useful life (In Years)* : Indicate the number of years to spread the depreciation. (Mandatory field)
Depreciation Rate by % will be auto calculated (if 2 years will be 50%, 4 years will be 25% and so forth)
3.Source Currency Cost: If the asset is acquired other than the local currency, indicate the source amount
4.Currency Code : Select the currency code
5.Currency rate: Enter the currency rate to be translated to the base currency
6.Purchase cost and Initial book value will be auto calculated, unless otherwise, do not change the value.
7.Accumulated Depreciation : if it is a new asset, amount will be zero (Fig 1). If this asset is not a new asset but a brought forward figure, enter the accumulated depreciation amount. (see Fig 2),
8.Residual Value : (Optional) Enter the scrap value...Read more....

Some asset may have some small value even if it is fully depreciated or even if it is fully depreciated, you still want to reflect in the book with the residual value as one dollar after the useful life.
The residual value (or aka scrap value) of an asset is usually estimated as its fair market value, as determined by agreement or appraisal.
For example: Let's say a machine costing $15,000 has an estimated service life of 10 years, and at the end of its service life it can be sold as scrap metal to the scrapyard for $2,000.00

9.Purchase Date : Enter the purchase date as per the supplier invoice. Note that the purchase date may or may not be the start date (the date that the asset is put to use) (see item 11).
10.First Depreciation Date: If this asset is not a new asset but a brought forward figure, indicate the first depreciation date of the asset (See Fig 2 below).
11.Start Depreciation Date: Enter the  month/year that you want the system to start the monthly depreciation.Note that the date you start your depreciation may or may not be the purchase date
Tips :

If your asset is purchased on the last few days of the month, example 28/10/2016 (see item 9),

1. You may want to set your [Start depreciation date] as Nov 2016

2. If your asset is purchased on the early part of the month example 9/10/2016, you may set or [Start depreciation date] as Oct 2016

3. A rule of thumb is 1st to 15th day of Oct 2016, [Start date depreciation] date will be Oct 2016,
   16th to 30th or 31st of each other month will have the start date in the next month (Nov 2016)

4. Your asset may not be in used until 1/1/2017. In this case your start day will be Jan 2017
5. Start depreciation date should not be earlier than the First Depreciation date

 

12.Next Depreciation date will be equal to Start Depreciation date in the first month of depreciation.
13.No. of Month Depreciated will be auto calculated using Start date(item 11)  less the first date (item 10)
14.Click Save , you will see a message below. Click OK


Related Topics

FAQ : Full year depreciation given for less than a year since purchase

 

 

 

 

 

 

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