2 Defining Depreciation Methods for France

To define the depreciation methods for France, this chapter contains these topics:

2.1 Declining Balance - Amortissement Dégressif

Defining this depreciation method includes the following tasks:

  • Adding a user defined code

  • Setting up depreciation formulas

  • Setting up the depreciation method

2.1.1 Adding a User Defined Code

On General User Defined Codes for Depreciation Method (12/DM), create code DF for Declining Balance - Dégressif.

Figure 2-1 General User Defined Codes screen

Description of Figure 2-1 follows
Description of "Figure 2-1 General User Defined Codes screen"

Complete the following fields with the values indicated below:

Field Value
Code DF
Description Dégressif
Special Handling Code 1
Hard Coded N

2.1.2 Setting up Depreciation Formulas

On Depreciation Formula Revision, define the following formulas:

  • First and subsequent years depreciation

  • Last year minus one

  • Last year

First and Subsequent Years Depreciation

Figure 2-2 Depreciation Formula Revision screen (First and Subsequent Years)

Description of Figure 2-2 follows
Description of "Figure 2-2 Depreciation Formula Revision screen (First and Subsequent Years)"

Complete the following fields with the values indicated below:

Field Value
Formula ID D07
Description % Declining Balance
Formula ((10 * 11) /49)*06

Last Year Minus One

Figure 2-3 Depreciation Formula Revision screen (Last Year Minus One)

Description of Figure 2-3 follows
Description of "Figure 2-3 Depreciation Formula Revision screen (Last Year Minus One)"

Complete the following fields with the values indicated below:

Field Value
Formula ID D22
Description Dégressif Last Yr - 1
Formula (10*12)
Multiplier/Constant 0.500000

Last Year

Figure 2-4 Depreciation Formula Revision screen (Last Year)

Description of Figure 2-4 follows
Description of "Figure 2-4 Depreciation Formula Revision screen (Last Year)"

Complete the following fields with the values indicated below:

Field Value
Formula ID D21
Description Last Year
Formula 10

2.1.3 Setting Up the Depreciation Method

On Depreciation Rule Revisions, set up the depreciation method.

Setting up the depreciation method includes the following tasks:

  • Setting up reference information and conventions

  • Attaching the formulas to depreciation method DF

2.1.3.1 Setting Up Reference Information and Conventions

Figure 2-5 Depreciation Rule Revisions screen (Reference)

Description of Figure 2-5 follows
Description of "Figure 2-5 Depreciation Rule Revisions screen (Reference)"

Complete the following fields with the values indicated below:

Field Value
Depreciation Method DF
Rule Description Dégressif
Life (Periods) 48
Initial Term Apport Blank (defaults to 1st day of 1st month)
Compute Direction R
In Service From/Thru 01/01/2005
Effective From/Thru 01/01/2005

2.1.3.2 Attaching the Formulas to Depreciation Method DF

Attach the following formulas to the depreciation method:

  • First Record: Life Years 1 and 2

  • Second Record: Life Year 3

  • Third Record: Life Year 4

First Record: Life Years 1 and 2

Figure 2-6 Depreciation Rule Revisions screen (Life Years 1 and 2)

Description of Figure 2-6 follows
Description of "Figure 2-6 Depreciation Rule Revisions screen (Life Years 1 and 2)"

Complete the following fields with the values indicated below:

Field Value
Life Yr Frm 1
Life Yr Thr 2
Annual Multiplier 0.37500000
Depreciation D07
Basis 504
SC (Secondary Percentage Continuation) 1
Depr. Base/Limit 100

Second Record: Life Year 3

Figure 2-7 Depreciation Rule Revisions screen (Life Year 3)

Description of Figure 2-7 follows
Description of "Figure 2-7 Depreciation Rule Revisions screen (Life Year 3)"

Complete the following fields with the values indicated below:

Field Value
Life Yr Frm 3
Life Yr Thr 3
Depreciation D22
Basis 504
SC (Secondary Percentage Continuation) 1

Third Record: Life Year 4

Figure 2-8 Depreciation Rule Revisions screen (Life Year 4)

Description of Figure 2-8 follows
Description of "Figure 2-8 Depreciation Rule Revisions screen (Life Year 4)"

Complete the following fields with the values indicated below:

Field Value
Life Yr Frm 4
Life Yr Thr 4
Depreciation D21
Basis 504
SC (Secondary Percentage Continuation) 1

2.2 Straight Line - Amortissement Linéaire Pro Rata Temporis

Defining this depreciation method includes the following tasks:

  • Adding a user defined code

  • Setting up depreciation formulas

  • Setting up the depreciation method

2.2.1 Adding a User Defined Code

On General User Defined Codes for Depreciation Method (12/DM), create code SL for Straight Line.

Figure 2-9 General User Defined Codes screen (Straight Line)

Description of Figure 2-9 follows
Description of "Figure 2-9 General User Defined Codes screen (Straight Line)"

Complete the following fields with the values indicated below:

Field Value
Code SL
Description S/L for France
Special Handling Code 1
Hard Coded N

2.2.2 Setting Up Depreciation Formulas

On Depreciation Formula Revision, define the following formulas:

  • First year depreciation

  • Years 2 through 5

  • Remaining days

First Year Depreciation

Figure 2-10 Depreciation Formula Revisions screen (First Year)

Description of Figure 2-10 follows
Description of "Figure 2-10 Depreciation Formula Revisions screen (First Year)"

Complete the following fields with the values indicated below:

Field Value
Formula ID JA1
Description Straight Line 1st Yr
Formula (16/12) * (10/11)
Multiplier/Constant 365.000000

Years 2 through 5

Figure 2-11 Depreciation Formula Revision screen (Years 2 through 5)

Description of Figure 2-11 follows
Description of "Figure 2-11 Depreciation Formula Revision screen (Years 2 through 5)"

Complete the following fields with the values indicated below:

Field Value
Formula ID JA2
Description S/L (year 2 - 5)
Formula (10/12)
Multiplier/Constant 5.000000

Remaining Days

Figure 2-12 Depreciation Formula Revision screen (Remaining Days)

Description of Figure 2-12 follows
Description of "Figure 2-12 Depreciation Formula Revision screen (Remaining Days)"

Complete the following fields with the values indicated below:

Field Value
Formula ID 100
Description SL (Remaining Days)
Formula (10/15)*16

2.2.3 Setting Up the Depreciation Method

On Depreciation Rule Revisions, set up the depreciation method.

Setting up the depreciation method includes the following tasks:

  • Setting up reference information and conventions

  • Attaching the formulas to depreciation method SL

2.2.3.1 Setting Up Reference Information and Conventions

Figure 2-13 Depreciation Rule Revisions screen (Reference)

Description of Figure 2-13 follows
Description of "Figure 2-13 Depreciation Rule Revisions screen (Reference)"

Complete the following fields with the values indicated below:

Field Value
Depreciation Method SL
Rule Description French Straight Line
Life (Periods) 60
Initial Term Apport A
Compute Direction R
In Service From/Thru 01/01/2005
Effective From/Thru 01/01/2005

2.2.3.2 Attaching the Formulas to Depreciation Method SL

Attach the following formulas to the depreciation method:

  • First Record: Life Year 1

  • Second Record: Life Years 2 through 5

  • Third Record: Life Year 6

First Record: Life Year 1

Figure 2-14 Depreciation Rule Revisions screen (Life Year 1)

Description of Figure 2-14 follows
Description of "Figure 2-14 Depreciation Rule Revisions screen (Life Year 1)"

Complete the following fields with the values indicated below:

Field Value
Life Yr Frm 1
Life Yr Thr 1
Annual Multiplier 5
Depreciation JA1
Basis 501
SC (Secondary Percentage Continuation) 1

Second Record: Life Years 2 through 5

Figure 2-15 Depreciation Rule Revisions screen (Life Years 2 through 5)

Description of Figure 2-15 follows
Description of "Figure 2-15 Depreciation Rule Revisions screen (Life Years 2 through 5)"

Complete the following fields with the values indicated below:

Field Value
Life Yr Frm 2
Life Yr Thr 5
Depreciation JA2
Basis 501
SC (Secondary Percentage Continuation) 1

Third Record: Life Year 6

Figure 2-16 Depreciation Rule Revisions screen (Life Year 6)

Description of Figure 2-16 follows
Description of "Figure 2-16 Depreciation Rule Revisions screen (Life Year 6)"

Complete the following fields with the values indicated below:

Field Value
Life Yr Frm 6
Life Yr Thr 6
Depreciation 100
Basis 501
SC (Secondary Percentage Continuation) 1

2.3 Calculating Derogatory Depreciation for France

Derogatory depreciation is the difference between the straight line and the declining balance depreciation methods.

J.D. Edwards software allows you to calculate two different types of depreciation for the same asset. To do this, you use two ledger types:

  • Ledger type AA for Straight Line depreciation based on the number of days (Pro Rata Temporis)

  • Ledger type AX for Declining Balance depreciation (Dégressif)

At the end of every period, after you calculate the depreciation on the above ledger types, you should perform the following procedure to create the entries that are necessary for justifying the derogatory depreciation.

To calculate derogatory depreciation

  1. Use the STAR tool to select entries where the depreciation for the period in the AX ledger (Declining Balance) is greater than that in the AA ledger (Straight Line).

  2. Create a journal entry in the AA ledger type to:

    • Debit the Derogatory Depreciation account (Balance Sheet). This is the French legal Chart of Accounts account 145 Amortissements Dérogatoires.

    • Credit the Exceptional Expenses Allowance (Income Statement). This is the French legal Chart of Accounts account 687 Dotations Exceptionnelles.

  3. Use World Writer to flag a field of the F0911 file so that the entries that have been flagged do not get selected again for posting to the Fixed Assets system.

  4. Use the STAR tool to select entries where the depreciation for the period in the AX ledger (Declining Balance) is less than that in the AA ledger (Straight Line).

  5. Create a journal entry in the AA ledger type to:

    • Debit the Regulated Reserves (Income Statement). This is the French legal Chart of Accounts account 787 Reprise Dotations Exceptionnelles.

    • Credit the Derogatory Depreciation account (Balance Sheet). This is the French legal Chart of Accounts account 145 Amortissements Dérogatoires.

  6. When the item is disposed, it is necessary to justify the Derogatory Depreciation account (French account 145 Amortissements Dérogatoires) by item number. To do this, use the STAR tool to generate a journal entry by asset number (account included in the AAI FX range).