Depreciation of Fixed Assets

Depreciation is used to spread the cost of an asset over its entire useful service life—that is, the period over which the asset is used, until it is no longer usable.

You can calculate the depreciation and depreciate an asset only after you have released fixed asset transactions related to an asset acquisition—for example, the Purchasing+ transaction that the system generates after you have created an asset by using the Fixed Assets (FA303000) form, or the Purchasing+ and Reconciliation+ transactions that the system generates after you have created an asset by using the Convert Purchases to Assets (FA504500) form (for details on transaction types, see Types of Fixed Asset Transactions).

Processing Depreciation

You process the calculation of the depreciation expenses by using the Calculate Depreciation (FA502000) form. On this form, you specify selection criteria to get the list of fixed assets, and the period to which the depreciation should be calculated. You also need to specify either the system should only calculate the depreciation amounts for informative purposes, or to calculate the amounts, and generate corresponding depreciation transactions, so that the assets can be depreciated once these transactions are released. To define it, you should select one of the following options in the Action box:

• Calculate Only: With this option, the system calculates depreciation expenses, and generates no transactions. You can view calculated amounts for each fixed asset in the Calculated column on the Depreciation tab of the Fixed Assets from. You can use these amounts for the planning purposes.

  To calculate depreciation expenses for all fixed assets, click Process All on the form toolbar. To calculate depreciation expenses for some fixed assets listed in the table, select the check boxes next to the required assets, and click Process on the form toolbar.

• Depreciate: With this option, the system calculates depreciation expenses, and generates the Calculated+ transactions. Once these transactions are released, their type automatically changes to Depreciation+. You can view the calculated and depreciated amounts for each fixed asset in the Calculated and Depreciated columns on the Depreciation tab of the Fixed Assets form.

  Note: To make this option available, make sure that the Update GL check box is selected in the Posting Settings section on the Fixed Assets Preferences (FA101000) form.

  To depreciate all fixed assets listed in the table, click Process All on the form toolbar. To depreciate some of fixed assets listed in the table, select the check boxes next to the required assets, and click Process on the form toolbar.

You can also calculate depreciation for a particular fixed asset on the Fixed Assets form. On this form, you select a required asset in the Asset ID box, and on the More menu (under Processing), you click Calculate Depreciation. No transactions are generated with this process. To depreciate the asset, you need to use the Calculate Depreciation form.

Viewing the Depreciation History

You can view the depreciation history of an asset on the Depreciation tab of the Fixed Assets form. You can view an asset's depreciation history in one of the following ways, depending on the Depreciation History View option selected on the Fixed Assets Preferences (FA101000) form:

• If the By Book option is selected, you can filter depreciation history by book. In this case, you select a book to display its information on the form. The depreciation history is a table that has years as columns and periods per year as rows.
• If the Side by Side option is selected, all the books to which the asset is assigned are displayed simultaneously. In this case, depreciation history is represented as a table with depreciation periods as rows and books as columns.