Stop Depreciation When Salvage Value Exceeds NBV
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.
See Asset Lifecycle Management Fundamentals: Enabling Options to Stop Negative Depreciation.
Stop Depreciation Example
The following table shows data that is used in the depreciation example that follows it:
| Attributes | Data |
|---|---|
|
Transaction Date |
January 1, 2006 |
|
Accounting Date |
January 1, 2006 |
|
In Service Date |
January 1, 2006 |
|
Calculation Type |
Life to Date |
|
Convention |
Actual Month |
|
Method |
Straight Line |
|
Asset Cost |
75,000.00 |
|
Salvage Value (Increased from 0 to 50,000 on January 1, 2008) |
50,000.00 |
|
Accumulated Depreciation (24 months in service) |
30,000.00 |
|
Net Book Value at January 1, 2008 |
45,000.00 |
|
Asset Useful Life |
60 months |
Depreciation Result - Stop Depreciation
The following table shows the result of the depreciation calculation when the Stop Depr option is selected:
| Year | Depreciation Calculation | Depreciation Expense |
|---|---|---|
|
January 1 through December 31, 2006 |
75,000 x (12/60 months) |
15,000.00 |
|
January 1 through December 31, 2007 |
60,000 x (12/48 months) |
15,000.00 |
|
January 1 through December 31, 2008 |
Depreciation stopped |
0 |
|
January 1 through December 31, 2009 |
Depreciation stopped |
0 |
|
January 1 through December 31, 2010 |
Depreciation stopped |
0 |
Stop Depreciation Example with Additional Adjustment of Salvage Value
The following table shows data that is used in the depreciation example that follows it:
| Attributes | Data |
|---|---|
|
Transaction Date |
January 1, 2006 |
|
Accounting Date |
January 1, 2006 |
|
In Service Date |
January 1, 2006 |
|
Calculation Type |
Life to Date |
|
Convention |
Actual Month |
|
Method |
Straight Line |
|
Asset Cost |
75,000.00 |
|
Salvage Value (Increased from 0 to 50,000 at January 1, 2008) |
50,000.00 |
|
Accumulated Depreciation (24 months in service) |
30,000.00 |
|
Net Book Value at January 1, 2008 |
45,000.00 |
|
New Salvage Value - (Reduced to zero at January 1, 2009) |
0 |
|
Asset Useful Life |
60 months |
Depreciation Result - Stop Depreciation with Additional Adjustment of Salvage Value
The following table shows the result of the depreciation calculation when the Stop Depr option is selected and there is an additional adjustment of salvage value:
| Year | Depreciation Calculation | Depreciation Expense |
|---|---|---|
|
January 1 through December 31, 2006 |
75,000 x (12/60 months) |
15,000.00 |
|
January 1 through December 31, 2007 |
60,000 x (12/48 months) |
15,000.00 |
|
January 1 through December 31, 2008 |
Depreciation stopped |
0 |
|
January 1 through December 31, 2009 (salvage value reduced to zero at January 1, 2009) |
(NBV - Salvage Value = 45,000) (45,000 - 0 = 45,000) 45,000 x (12/24 months) |
22,500.00 |
|
January 1 through December 31, 2010 |
22,500 x (12/12 months) |
22,500.00 |