Note: The asset depreciation routine also includes calculation of internal rate of return, insurance risk cost and other types of calculated costs.
There are two types of depreciation proposals available:
- Work proposal
- Update proposal
You have the possibility to simulate the outcome by using a work proposal. A work proposal can be created for a selection of assets, whereas an update proposal must include them all. An asset can occur on several work proposals (for the same depreciation type) at the same time. Proposals with errors can never be updated; the errors must be corrected and you have to create a new proposal. However, an accounting error can be cleared by running the activity G/L account rebuild from the Depreciation – Activity selection panel after corrections. The type of error is shown on the Depreciation – Proposal overview panel, e.g., if there is an error with the accounting or an error with the depreciation rule.
For new assets that should be depreciated in periods, for which depreciation have already been run, you may select old periods again, and only the new assets are depreciated. If, however, you continue the depreciation without running these past periods, the depreciation for the new assets will be accumulated in the next period.
The valid depreciation periods for a depreciation type are scheduled in the Depreciation type table. The schedule cannot be overridden when working with depreciation proposals, meaning that you cannot depreciate a type which is omitted in the schedule.
Some of the advantages of this functionality are:
- When calculating depreciation for the assets, you can create a work proposal where you analyse the results before updating the system with the actual transactions.
- You can simulate future depreciation. This function gives you the opportunity to plan the cost for future investments as well as analyse year-to-year depreciation cost comparison.
- You can state a minimum residual value per asset. When the asset reaches this residual value, the system depreciates the remaining amount in the last depreciation period. This eliminates the problem of residual value left on an asset when using the declining (reducing) balance method.
- You can enter a minimum depreciation amount for an asset. Amounts less than the minimum depreciation are not depreciated, and transactions concerning this amount are accumulated into the next depreciation period.
Enquiries and printouts
- Asset enquiry – displays asset basic information.
- Asset balance enquiry – displays assets before disposal. Here you can find further information about assets.
- Disposal enquiry – displays assets after disposal. Here you can find information about assets that have been depreciated and because of this no more appear on the depreciation proposal.
- Depreciation modules enquiry
- Depreciation rules enquiry
- Depreciation types enquiry
- Rate curves enquiry
- Usage curves enquiry
- Asset list – displays asset basic information.
- Asset balance list – displays assets before disposal. Here, you can see the balances per asset and depreciation type for a selected period.
- Depreciation time axis list – displays assets for one depreciation type at a time. Here you can analyse depreciations both in the past and the future. The list information can also be transferred to a file.
- Alternative depreciation comparison list – displays the difference between the depreciations from the regular depreciation type and the alternative depreciation type
- Depreciation type analysis list – displays a maximum of five types of depreciation and one depreciation year at a time. Here you can analyse different depreciation types.
- Asset depreciation life cycle list – displays the life cycle of each asset. Displays depreciations both in past and future simulations.
- Disposal list – displays disposed assets.
- Depreciation modules printout
- Depreciation rules printout
- Depreciation type printout
- Rate curves printout
- Usage curves printout
Related topics
- Create a work proposal
- Create an update proposal
- Rebuild G/L accounts
- Validate period
- Update a depreciation proposal
- Delete a depreciation proposal
- About calculations
Depreciation calculations are performed by a depreciation module. The module is connected to a depreciation type for an asset by a depreciation rule. This document is an extensive introduction to depreciation types and calculation rules used in the depreciation routine. - About working with account movements
If asset balance accounts are changed during the life of an asset, then the system will automatically create balance movements in the following depreciation run, if the asset occurs in the update proposal. Already when creating the depreciation proposal, the system will give a warning that such balance movements will be performed. This document contains further information on account movements.