Enabling Options to Stop Negative Depreciation

This topic provides an overview of the setup necessary to stop negative depreciation and lists the pages used to enable this option.

Page Name

Definition Name

Usage

Installation Options - Asset Management Page

INSTALLATION_AM

Select the Stop Depr when NBV < Salvage check box to enable the option system-wide.

Business Unit/Book Feature Page

BU_BOOK_FEATURE

Select the Stop Depr when NBV < Salvage check box to enable the option at the business unit level.

Asset Net Book Value report (AMDP2100)

RUN_AMDP2100

Select to report assets with negative NBV only and assets with NBV < Salvage.

In compliance with International Accounting Standards (IAS) and Generally Accepted Accounting Principles (GAAP), PeopleSoft provides the option to stop the depreciation calculation in the event the salvage value of an asset exceeds that of its NBV. Based on the rules you establish at the Installation Option and Business Unit/Book levels, the depreciation calculation program stops depreciating assets when the NBV is less than the salvage value. Hence, the system does not create negative depreciation amounts in order to reach to the salvage value at the end of the asset's useful life.

It is important to understand that the depreciation program works at the ChartField level such that you can define a particular salvage value for one ChartField value but not for the other. For example, assume that an asset belongs to two different departments (X and Y, 40% and 60%, respectively) and the total cost of the asset is 62,000 USD. However, the salvage value could be zero for department X and 2,000 USD for department Y. The depreciation calculation generates depreciation for each department separately as two independent rows.

Enable the option to stop negative depreciation for the following:

  • Installation Options - Asset Management

  • Asset Management Business Unit Definition - Business Unit/Book Feature page

  • Asset Net Book Value Report (AMDP2100)

The Asset Net Book Value report shows multi-ChartField assets that have had their depreciation stopped for at least one ChartField. You can select to show assets with negative NBV only and you can select to show assets whose NBV is less than the salvage value.

The alternate approach to handling an asset when the NBV of an asset becomes less than its salvage value is to allow the system to generate negative depreciation until the NBV equals the salvage value at the end of the asset's useful life. To use this approach, simply do not select the Stop Depr when NBV < Salvage options.

PeopleSoft also delivers a Negative Depreciation query (AM_NEG_DEPR_NBV_LT_SALVAGE) that reports those assets that have a NBV that is less than their salvage value for any given fiscal year and period. This query is based upon the depreciation reporting table (DEPR_RPT).

See Calculating Depreciation When Salvage Value Exceeds Net Book Value (NBV).