36 Set Up Ledger Depreciation Rules

This chapter contains this topic:

• Chapter 36, "Setting Up Ledger Depreciation Rules,"

Before you can create equipment masters, you must set up ledger depreciation rules. When you set up ledger depreciation rules, you define the depreciation methods that the system uses to calculate depreciation for specific ledger types. As a minimum, you must set up a depreciation rule for the AA (Actual Amounts) ledger type for each company and asset cost account combination that you have in the system. You can set up as many ledger depreciation rules as you need, based on any combination of the following:

• Company

• Accounting category

• Depreciation category

• Asset cost account

• Effective From

The values that you set up on Company Ledger Depreciation Rules are also used by the Fixed Assets system. JD Edwards World recommends that you coordinate with your accounting department when you set up or change ledger depreciation rules.

See Also:

• Understand Standard Depreciation Methods, Understand User Defined Depreciation Methods and Setting Up User Defined Depreciation in the JD Edwards World Fixed Assets Guide for more information about valid field combinations that you can apply to ledger depreciation rules

36.1 Setting Up Ledger Depreciation Rules

Navigation

From Equipment/Plan Management (G13), enter 29

From Equipment/Plan Management Setup (G1341), choose Ledger Depreciation Rules

To set up ledger depreciation rules

1. On Ledger Depreciation Rules, complete at least one of the following fields for each ledger depreciation rule that you want to set up:

   • Company

   • Accounting Category

   • Depreciation Category

   • Asset Cost Object

   Figure 36-1 Ledger Depreciation Rules screen

   
   Description of "Figure 36-1 Ledger Depreciation Rules screen"
   
   

2. Complete any of the following optional fields:

   • Asset Cost Subsidiary

   • Asset Cost Subledger

   • Subledger Type

   • Effective From Date

3. For each ledger depreciation rule that you want to set up, complete a valid combination of the following fields:

   • Ledger Type

   • Depreciation Method

   • Life Periods

   • Investment Term Apportionment Code (TA)

   • Compute Direction

   • Method Percent

   • Production Units Schedule

Field	Explanation
Company	A code that identifies a specific organization, fund, entity, and so on. This code must already exist in the Company Constants table (F0010). It must identify a reporting entity that has a complete balance sheet. At this level, you can have intercompany transactions. Note: You can use company 00000 for default values, such as dates and automatic accounting instructions (AAIs). You cannot use it for transaction entries.
Accounting Category	A user defined code (12/C1) that determines the accounting class category code. You use this accounting category code to classify assets into groups or families, for example, 100 for land, 200 for vehicles, and 300 for general office equipment. JD Edwards World recommends that you set up major class codes that correspond to the major general ledger object accounts in order to facilitate the reconciliation to the general ledger. Note: If you do not want to use the major accounting class code, you must set up a value for blank in the user defined code table.
Depreciation Category	The depreciation category an asset belongs to. The value is derived from the User Defined Code specified as the "Depreciation Category Code", DPCC, in the Fixed Assets constants. Generally, a depreciation category will be used to group assets with identical depreciation characteristics for depreciation calculation and reporting purposes.
LT	A user defined code (09/LT) that specifies the type of ledger, such as AA (Actual Amount), BA (Budget Amount), or AU (Actual Units). You can set up multiple, concurrent accounting ledgers within the general ledger to establish an audit trail for all transactions.
De Me	The user defined code (12/DM) that indicates the method of depreciation for the specified book. In addition to any user defined depreciation methods you set up for your company, the following standard depreciation methods are available in the Fixed Assets system: 00 – No depreciation method used 01 – Straight Line Depreciation 02 – Sum of the Year's Digits 03 – 125% Declining Balance to Cross-Over 04 – 150% Declining Balance to Cross-Over 05 – Double Declining Balance to Cross-Over 06 – Fixed % on Declining Balance 07 – ACRS Standard Depreciation 08 – ACRS Optional Depreciation 09 – Units of Production Depreciation 10 – MACRS Luxury Cars - Domestic 11 – Fixed % Luxury Cars - Foreign 12 – MACRS Standard Depreciation 13 – ACRS Alternative Depreciation 14 – ACRS Alternate Real Property 15 – Fixed % of Cost 16 – Fixed % on Declining Balance to Cross-Over 17 – AMT Luxury Auto 18 – ACE Luxury Auto NOTE: Any additional depreciation methods you create for your organization must have an alpha code.
Life Per	The life of an asset in months or periods. The system uses months or periods only to express the life of an asset. For example, if your company uses a 12-month calendar, then a five-year ACRS asset has a 60-month life. If your company uses a 13-month calendar, then a five-year ACRS asset has a 65-month life, and so on. You must specify a life month value for all user defined depreciation methods, and for all standard depreciation methods, except the standard methods 00, 06, 09, 11, and 15.
T A	A code for additional depreciation information. This code is used for Investment Tax Credit (ITC) and averaging conventions. The system validates the code you enter in this field against user defined code table 12/AC. Valid codes are: 0 – No ITC Taken 1 – Three Year Method (3 1/3%) 2 – Five Year Method (6 2/3%) 3 – Seven Year Method (10%) 4 – ACRS Method with Basis Reduction (10% ITC) 5 – ACRS Method without Basis Reduction (2% ITC or No ITC) A – Actual Date of Depreciation Start Period M – Mid-Month Convention Q – Mid-Quarter Convention Y – Mid-Year Convention P – Middle of Period F – First-half/Second-half W – Whole Year N – First Day of Next Period R – First Day of Next Year S – Actual Start Date for Primary Rule/First Day of Period for Secondary Rule Note: Numeric codes apply to standard depreciation methods only. To determine the date for F (First-half/Second-half), use the following guidelines: If the asset was placed in service in the first half of the year then the adjusted depreciation start date is the first day of the year. If the asset was placed in service in the second half of the year then the adjusted depreciation start date is the first day of the succeeding year. The first half of the year expires at the close of the last day of the calendar month which is closest to the middle of the tax year. The second half of the year begins the day after the expiration of the first half of the tax year.
C D	A code that indicates the method of computation that the system uses to calculate depreciation based on the depreciation method you specify. Valid codes are: C – Current year to date. Calculates only the current year's depreciation. I – Inception to date. Recalculates the entire depreciation amount from the start date through the current year. Prior-year depreciation is then subtracted to determine current year depreciation. This method results in a one-time current period correction for any errors in prior period depreciation. F – Inception to date. Calculates inception to date for the first rule (if there are two rules) and uses a C for the second rule. P – Current period. Calculates depreciation for the current period and then extrapolates the annual amount based on the cumulative percent from the period pattern and year-to-date posting. Any depreciation calculated for the current period is subtracted. R – Remaining months. Depreciates the net book value as of the beginning of the current tax year over the remaining life of the asset. This results in the amortization of prior period calculation errors over the remaining life of the asset.
Method %	Enter the percentage you want the system to use when calculating depreciation. Use whole numbers. For example, enter 10 for 10%. The system uses a percentage when computing the following methods of depreciation: 06 – Fixed % on Declining Balance. (This method of depreciation is commonly used by Canadian and utility companies.) 11 – Fixed % Luxury Car - Foreign. 15 – Fixed % of Cost. 16 – Fixed % on Declining Balance to Cross-Over. The system also uses this field to compute any user defined depreciation method in which you specify a percentage.
Prod Units Schedule	The alphanumeric code you assign to a units of production schedule. You must set up the schedules you want to use for method 09 (Units of Production Depreciation) in advance on the Units of Production Schedule screen.

36.1.1 What You Should Know About

Depreciation Rules	Description
Non-depreciating equipment	You must set up the AA ledger type as a minimum for all of your equipment. Use depreciation method 00 with the AA ledger type for non-depreciating equipment.