35 Set Up Depreciation Account Rules

This chapter contains this topic:

• Chapter 35, "Setting Up Depreciation Account Rules,"

Before you create equipment masters, you must set up depreciation account rules. Depreciation account rules define links between asset cost accounts and depreciation accounts. Depreciation account rules simplify the creation of equipment masters by defining how the system classifies equipment. In addition, the system posts depreciation amounts to the accounts that you specify in the depreciation account rules.

The Fixed Assets system also uses the values that you set up on Company Depreciation Account Rules. JD Edwards World recommends that you coordinate with your accounting department when you set up or change depreciation account rules.

Note:

You must set up depreciation account rules for every combination of company and asset cost account. Ensure that you set up depreciation account rules for any new cost accounts or companies that you add to your system at a later time. If you make any changes to depreciation account rules, you should verify that the values are correct before you create new equipment masters.

35.1 Setting Up Depreciation Account Rules

You can set up date-sensitive depreciation account rules. For example, if depreciation for a particular class of assets, such as heavy equipment, must post to different accounts after January 1, you can set up a rule with an effective date of January 1. As of January 1, the system posts depreciation for heavy equipment to the accounts you specify in the date-specific rule.

Navigation

From Equipment/Plan Management (G13), enter 29

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

To set up depreciation account rules

1. On Depreciation Account Rules, complete the following fields:

   • Company Number

   • Asset Cost Object

   Figure 35-1 Depreciation Account Rules screen

   
   Description of "Figure 35-1 Depreciation Account Rules screen"
   
   

2. Complete the following optional fields:

   • Asset Cost Subsidiary

   • Effective From Date

   • Major Accounting Class

   • Major Equipment Class

3. To specify an accumulated depreciation account, complete the following fields:

   • Accumulated Depreciation Business Unit

   • Accumulated Depreciation Object

   • Accumulated Depreciation Subsidiary

4. To specify a depreciation expense account, complete the following fields:

   • Depreciation Expense Business Unit

   • Depreciation Expense Object

   • Depreciation Expense Subsidiary

5. To specify a default account for revenue credit, complete the following fields:

   • Revenue Default Credit Business Unit

   • Revenue Default Credit Object

   • Revenue Default Credit Subsidiary

Field	Explanation
Company Number	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.
Asset Cost Object	The general ledger account (object number) used to record a fixed asset's acquisition cost. Within each company, you define default coding instructions for asset cost accounts. Then, based on these default codes, when you set up a new asset, the system automatically assigns the following: Major and subclass codes G/L accounts for depreciation and revenue Depreciation books
Major Accounting Class	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.
Major Equipment Class	A user defined code (12/C2) that is used to classify assets into groups or families. You use the equipment category code as a subclass to further define the accounting class, for example, 310 for copy equipment, 320 for projectors, and 330 for typewriters within the accounting class for general office equipment. Note: If you do not want to use the major equipment class, you must set up a value for blank in the user defined code table.

35.1.1 What You Should Know About

Depreciation	Description
Depreciation calculation	Depreciation calculation is based on the rule in effect at the end of the year. If you add or change a rule during the year, you must run the asset transfer program to bring existing balances into alignment with the new rule.
Revising depreciation account values	Any revisions that you make to the depreciation account values for an asset cost account or company affect only the new equipment that you add to the system after making the changes. The revisions do not affect existing equipment.
Date sensitivity	When you enter a value in the Effective From field, the system applies the depreciation account rule from that date until you enter an identical depreciation account rule, but with a different beginning date. The Effective Through date of the original rule then becomes the day before the Effective From date of the new rule.
Company numbers	The company number that you associate with the asset cost and accumulated depreciation accounts must be the same as the company number that you assign to the piece of equipment.
Major Accounting Class	JD Edwards World recommends that you establish a one-to-one relationship between the asset cost account and the Major Accounting Class code (12/C1). If you establish this one-to-one relationship, you will not need to override the default values when you create new equipment masters.