Asset Depreciation

Note:

In the latest Fixed Assets Management version, custom journals don't work with Multi-book accounting.

Use Asset Depreciation to run first time depreciation or to depreciate assets after you revise their method or period.

You can run depreciation periodically for a single or several asset types. This procedure is run to depreciate assets for the next period. The SuiteApp decides which assets require depreciation by checking the depreciation start date, last depreciation period, and depreciation rules. When it posts the depreciation values, the system creates a batch of GL journal entries.

An asset depreciates for each period (set on the depreciation method) up to the date entered on the Depreciate Assets page.

For example, if an asset depreciates monthly and the last depreciation is in January,a depreciation run in June processes depreciation for February through June.

Note:

Depreciation stops when the last depreciation period is reached for both the accounting and alternate/tax methods assigned to the asset.

Important:

If you enabled the accounting preferences Make Departments Mandatory, Make Classes Mandatory, and Make Locations Mandatory, but the asset’s department, class, or location is not set, the system won't process the depreciation. No depreciation history records or journal entries will be created.

To depreciate assets for the period:

1. Go to Fixed Assets > Transactions > Asset Depreciation.

2. Enter values for the following fields:

   • Asset Type(s) — Select one or more asset types.

   • Subsidiary(s) — Select one or more subsidiaries. Check Include Children if you want to include the child subsidiaries (and their children) of the selected subsidiary.

   • Depreciation Period —Enter a date up to which assets will be depreciated.

   • Depreciation Reference —Enter a depreciation reference to be used as the base reference on all generated journals. Leave this field blank to use the default reference.

3. Click Depreciate Assets. The SuiteApp calculates depreciation based on the entered method and period.

   You'll be redirected to the Process Status page, where you can track the depreciation status. The Process Status page queues the following processes for depreciation. Click Details on any process to view the its stage details. For more information, see Background Processing of Fixed Assets.

   Process	Process Stage	Process Stage Description
   Asset Depreciation	Generate Depreciation Schedule Values	Creates depreciation history records for assets and tax methods without an existing depreciation schedule. If the asset and tax methods already have a depreciation schedule, the status shows Not Required.
   	Create Journal Entries	Creates journal entries posting to the fixed asset depreciation and expense accounts entered on the Accounts tab. A journal entry is created per asset type and per period of depreciation.
   	Prepare Data to Update Records	Gets updated values from journal entries, and identifies which records to update. The status shows Not Required if no journal entry was created in the previous step.
   	Update Asset Records	Updates values on the asset record. If you enabled Multi-book Accounting, this process also updates tax methods with accounting books.
   	Update Tax Methods	Updates tax methods. If you enabled Multi-book Accounting, this process also updates tax methods without accounting books.
   	Update Compound Assets	Updates compound asset records.
   	Update Related Records	Updates other records related to this asset.

   If you enabled Custom Transactions and Use Custom Journals, a specific journal entry is created for asset depreciation. You can view these journal entries in Fixed Assets > Transactions > Journal Types. You have to set the status of the journal entry to Approved before it posts. For more information, see Viewing and Approving Custom Journal Entries.

   If Require Approvals on Journal Entries is enabled, and you don't have permission to approve journal entries, an administrator must approve them before posting.

   When an adjustment period is included in the accounting period setup, depreciation journal entries are posted to the end of the base period, if it's open. If the period is closed, the journal entry posts to the next open period.

   Note:

   When depreciation is zero, the system creates a zero-value depreciation history record with no posting reference. No journal entry is created.

   The depreciation date should fall within an existing accounting period, otherwise no journal entry is created.

Generating Depreciation Schedule Values

The Fixed Assets Management SuiteApp can forecast depreciation values for both accounting and tax methods. This process automatically creates the depreciation schedule for the entire asset life when an asset record is generated from a proposal. This feature is automatically enabled in newly-installed bundles.

For assets that you create manually or through CSV import, a script runs every Sunday to check for assets without depreciation schedules. The script creates the schedule from the asset’s depreciation start date and depreciation period. The script also adjusts the depreciation schedule values whenever the asset's depreciation history record changes. You can also manually trigger the precompute process on the FAM System Setup page.

Note:

You can change when the script runs, depending on your preference. For more information, see Managing Fixed Assets Scripts.

A depreciation schedule can't be created for assets in the following cases:

• If the depreciation methods use the CU variable in their formula. For example, Asset Usage.

• If the asset is included in a group depreciation.

• If Use Accounting Period Dates for Depreciation is enabled, a depreciation schedule is created only up to the accounting period you've set up.

When you check the precompute status, you may see multiple entries for Generate Depreciation Schedule Values. These duplicates don't affect any of the FAM records. The number of entries in the FAM Process Stage Details reflects the number of times the script was queued. The scripts can be queued multiple times for any of the following reasons:

• Application server restart – When this happens, the scripts resume processing the record from where it left off.

• Map/Reduce yielding – This is a feature of the scripts that enables it to yield or resume processing if certain limits are reached. For more information, see Map/Reduce Yielding.

• Batch processing limits – The Generate Depreciation Schedule process handles up to 5,000 records at a time. The script runs again if there are more than 5,000 records to process.

Depreciation of Compound Assets

Although the components depreciate together with the compound asset, they're treated as individual assets. Each component has its own depreciation history record. The compound asset record shows the total component depreciation, including alternate depreciation, but it won't have journal entries. You can find the journal entries in the component asset record under Components > Depreciation History subtab.

The compound asset's depreciation start date follows the date of the component with the earliest depreciation start date. The end date follows the date of the component with the latest depreciation end date.

For more information about depreciating an asset, see Asset Depreciation.

Sample Scenarios for Compound Asset Depreciation

The following describes different scenarios that you may encounter when depreciating a compound asset. A corresponding table shows sample values for the compound asset and the component before and after depreciation. For each scenario described, the straight line accounting method is used to depreciate the assets on a monthly basis.

Scenario 1: Depreciate a new compound asset that contains new components, all of which have the same depreciation start date, for 1 month. Selected depreciation period is 1/31/2015.

	Before Depreciation			After Depreciation
	Compound	Component 1	Component 2	Compound	Component 1	Component 2
Asset Status	New	New	New	Depreciating	Depreciating	Depreciating
Depreciation Start Date	1/1/2015	1/1/2015	1/1/2015
Asset Life	6	3	6
Asset Original Cost	900	300	600
Asset Current Cost	900	300	600
Current Net Book Value	900	300	600	700	200	500
Cumulative Depreciation				200	100	100
Last Depreciation Period				1	1	1
Last Depreciation Amount				200	100	100
Last Depreciation Date				1/31/2015	1/31/2015	1/31/2015

Scenario 2: Fully depreciate all components of a compound asset. Each component has a different depreciation end date. Selected depreciation period is 9/14/2015.

	Before Depreciation			After Depreciation
	Compound	Component 1	Component 2	Compound	Component 1	Component 2
Asset Status	New	New	New	Fully Depreciated	Fully Depreciated	Fully Depreciated
Depreciation Start Date	1/1/2015	6/15/2015	1/1/2015
Depreciation End Date	9/14/2015	9/14/2015	8/14/2015
Asset Life	9	3	6
Asset Original Cost	900	300	600
Asset Current Cost	900	300	600
Current Net Book Value	900	300	600	0	0	0
Cumulative Depreciation				900	300	600
Last Depreciation Period				9	3	6
Last Depreciation Amount				100	100	100
Last Depreciation Date				9/30/2015	9/30/2015	8/31/2015

Scenario 3: Depreciate a compound asset whose component depreciation history record has no transaction amount. Selected depreciation period is 1/31/2015.

	Before Depreciation		After Depreciation
	Compound	Component 1	Compound	Component 1
Asset Status	New	New	Depreciating	Depreciating
Depreciation Start Date	1/1/2015	1/1/2015
Depreciation End Date	3/31/2015	3/31/2015
Asset Life	3	3
Asset Original Cost	0	0
Asset Current Cost	0	0
Current Net Book Value	0	0	0	0
Cumulative Depreciation			0	0
Last Depreciation Period			1	1
Last Depreciation Amount			0	0
Last Depreciation Date			1/31/2015	1/31/2015
Depreciation history record: 1/1/2015 — 1/31/2015; Transaction amount: 0

Depreciation of Assets with Zero and Negative Costs

The SuiteApp can depreciate assets with zero and negative costs, provided the combination of the affected asset costs is any of the following:

Original Cost	Current Cost	Residual Value
Negative	Negative	Negative
Negative	Negative	Zero
Negative	Zero	Zero

The minimum Residual Value you can enter is zero. By default, the system uses the absolute value of all negative asset costs. Therefore, depreciation for assets with negative values is calculated using the absolute values of the original and current costs up to zero or absolute Residual Value.

You can enter negative values in asset records if Allow Negative Asset Cost is enabled. For more information, see Setting Up the Fixed Assets Management System.

Important:

For accounting methods, the system won't depreciate assets with negative costs if Allow Negative Asset Cost is turned off. No depreciation history records or journal entries are created. Even if Allow Negative Asset Cost is turned off, you may still import negative costs depending on your settings for CSV import. For more information, see General Guidelines for Importing Fixed Asset Records.

Related Topics

• Fixed Assets Management Overview
• Depreciation Methods
• Creating Asset Records from Transactions
• Creating Asset Records through CSV Import
• Creating Asset Records Manually
• Managing Assets
• Group Tax Depreciation
• French Derogatory Depreciation
• Asset Disposal by Sale or Write-Off
• Partial Disposal of an Asset
• Revaluation of an Asset
• Asset Split
• Asset Transfer

• Fixed Asset Recovery Script

• Deleting Assets

General Notices