Depreciation Book

OBJECTIVE

The Depreciation Book function is used to define the assets to be depreciated. The calculation options are used to generate the depreciation accounting entries for these assets.

Generally, these fixed assets will also be subjected to the depreciation calculation but it is also possible to create fixed assets that are entirely depreciated or that do not require a depreciation calculation, in order to display them in the depreciation plan.

It is also through this window that different adjustments can be performed in the fixed assets file:

• Acquiring preexisting fixed assets
• Partial disposals of existing fixed assets
• Complete disposal of a fixed asset
• Suspending the depreciation calculation during one or more periods

 

PREREQUISITEs

• Project Management
• Define Depreciation Categories
• Define Depreciation Groups
• Define Status Codes
• Define Depreciation Rates

 

Steps

maestro* > Accounting > Financial Management > Depreciation > Depreciation Book

 

Creating a Depreciation Transaction

1. Enter the required information:

Field	Description
Type	Available values: Equipment Must be linked to an Equipment project. The value entered in the Number field must exist in the Projects file. A search button for the Projects file is available tpo the right of the Number field, allowing the selection of a value in the projects table. Other Other type of asset can be buildings, equipment not used on projects, etc. In this case, it is not necessary to link the asset to a project.
Number	Number of the depreciable asset. 20 alphanumerical characters.
Description	Description that identifies the asset. Appears on the depreciation plan and on most Deprecation reports and screens.
Status	Status: Active or Inactive. Only depreciations with the Active status are taken into account when calculation depreciations.
Purch Date	Date of purchase.
Year	Year of the asset. Appears on the depreciation plan and mainly applies to equipment.
Acquisition Cost	Acquisition cost.
Model	Model of the asset. Mainly applies to equipment.
Serial Number	Serial number. Mainly applies to equipment.
Available Years	Financial years available for calculating the depreciation. For each of these years, the depreciation calculation process in relation to the fixed asset selected is displayed in the Status list.
Status	Status of the financial year. Avalaible values: Inactive The fixed asset was not available at this moment. Current Year The depreciation calculation is ongoing for the year. Closed Year The depreciation calculation has been completed for the year. Year not started A new year for which no calculation has been performed. Future Past year for which no calculation was performed.

2. Enter the required information in the Fixed Assets tab. The information displayed in this tab us used to enter data and settings in relation to the depreciation calculation for the current fixed asset, as well as display the progress status of the depreciation calculation for the selected year.
   1. The Details section contains the basic information linked to the depreciation calculation or calculated depreciation:

   Field	Description
   Calc Code	Code that identifies the calculation method of the depreciation to be applied to the fixed assets, as defined in the Define Depreciation Rates option.
   Category	Depreciation category from the Define Depreciation Categories option. The default allocation indicated in category management will be displayed in the Allocation tab, if entered. The category can be used to group fixed assets in the depreciation plan. The category is also a criteria to select fixed assets for the monthly depreciation calculation.
   Group	Depreciation group from the Define Depreciation Groups option. The default allocation indicated in category management will be displayed in the Allocation tab, if entered. The group can be used to group fixed assets in the depreciation plan.
   Status	Depreciation status from the Define Status Codes option.

   2. Straight-Line Depreciation, Declining Balance Depreciation, or Hourly Depreciation sections:

   Straight-Line Depreciation

   The Straight-Line Depreciation panel contains the specific information concerning the straight-line depreciation calculation. It is displayed if the depreciation mode indicated in the selected calculation code is Linear.

   Field	Description
   No. Years	Total number of years for which the fixed asset will be depreciated, as defined in the selected calculation code. This field is displayed for informational purposes only and cannot be modified.
   Maximum Percentage	Percentage value of the fixed asset that must be depreciated, as defined in the selected calculation code. This field is displayed for informational purposes only and cannot be modified.
   Active periods selection	Check the periods for which the depreciation must be calculated. For a normal year, twelve periods must be checked but there are multiple situations that make it so certain periods could not be checked. For example: The fixed asset was acquired during the year and must not (cannot) take a depreciation for the whole year. The fixed asset is not in use during certain months of the year and must not (cannot) take the depreciation calculated for these periods.
   Reactivate all periods next year	Allows indicating if we want the depreciation of the next year to be taken over the whole year or if only selected periods for the current year must be reactivated for the next year (by default). NOTE: This field is invisible if all periods are checked (selected).
   Method for calculating the depreciation for this incomplete year	Allows indicating if we want the total amount of the depreciation planned for the year to be accounted or simply the part that applies to the selected periods. Available values: NOTE: This field is invisible if all periods are checked (selected). On the entire year The total depreciation planned for the year will be accounted. This amount will be distributed amongst the applicable periods. Example: Straight-line depreciation over 10 years, fixed asset with a value of $100,000, year where only 8 periods are selected. The total amount planned for the year, $10,000 will be distributed over these 8 periods ($1,250 per month) and only the selected periods will be accounted, for a total amount $10,000. On active periods (linear) The depreciation planned for the year will be brought back to a monthly occurence and the ammounts corresponding to the applicable periods will be accounted. Example: Straight-line depreciation over 10 years, fixed assets with a value of $100,000, year where only 8 periods are selected. The total amount planned for the year of $10,000 will be distributed over the 12 periods of the year (833.33$ per month) and only the selected periods will be accounted, for an annual total of $6,666,67. On active periods (all) The planned disbursement for the year will be brought back to a monthly basis and the amounts corresponding to the applicable periods will be accounted.

   Declining Balance Depreciation

   The Declining Balance Depreciation panel contains the information specific to the declining depreciation calculation. It is displayed if the depreciation mode entered in the selected calculation code is Decreasing.

   Field	Description
   Depreciation Rate	Applicable annual depreciation rate, as defined in the selected calculation code. This field is displayed for informational purposes only and cannot be modified.
   Maximum Percentage	Percentage of the fixed asset's value that must be depreciated, as defined in the selected calculation code. This field is displayed for informational purposes only and cannot be modified.
   Active periods selection	Check (select) the periods during which the depreciation must be calculated. For a normal year, the twelve periods have to be checked but there are many situations where some periods could not be checked. For example: The fixed asset was acquired during the year and we must not (cannot) take the depreciation for the whole year. The fixed asset is only used during certain months of the year and we must not (cannot) calculate the depreciation during these periods.
   Reactivate all periods next year	Allows indicating if we want next year's depreciation to be applied to the whole year or if only the selected periods for the current year must be reactivated for the next year (by default). NOTE: This field is invisible if all periods are checked.
   Method for calculating the depreciation for this incomplete year	Allows indicating if we want the planned total depreciation amount for the year to be accounted or simply the part applicable to the selected periods. Available values : On the entire year The total depreciation for the year will be accounted. This amount will be distributed between all applicable periods. Example: Straight-line depreciation over 10 years, fixed asset with a value of $100,000, year where only 8 periods are selected. The planned total amount for the year of $10,000 will be distributed over the 8 selected periods ($1,250 per month) and only the selected periods will be accounted, for an annual total of $10,000. On active periods (linear) The depreciation planned for the year will be brought back to a monthly basus and only the amounts corresponding to the applicable periods will be accounted. Example: Straight-line depreciation over 10 years, fixed asset with a value of $100,000, year where only 8 periods are selected. The total planned amount for the year of $10,000 will be distributed over the 12 periods of the year ($833.33 per month) and only the selected periods will be accounted, for an annual total of $6,666.67. On active periods (all) The planned depreciation for the year will be brought back to a monthly basis and only the amounts corresponding to the applicable periods will be accounted.

   Hourly Depreciation

   1. The Hourly Depreciation panel contains the information specific to the hourly depreciation calculation mode. It is displayed if the depreciation mode indicated in the selected calculation code is Hourly.

   Field	Description
   Value	Original accounting value of the fixed asset. It is generally the purchase cost of the asset, excluding taxes.
   Residual	Residual value of the fixed asset, once completely depreciated.
   Net	Value to depreciate, corresponding to the value of the fixed asset minus its residual value. Thos field is displayed for informational purposes only and cannot be modified.
   Number of hours anticipated	Number of hours representing the duration of use of the asset.
   Hourly Dep. Rate	Depreciation amount that will apply to every hour the fixed asset is used. It is calculated by dividing the net value of the asset by the number of planned hours. This field is displayed for informational purposes only and cannot be modified.
   Year Hours	Number of hours for which the depreciation was calculated for this fixed asset, for the current year. This field is displayed for informational purposes only and cannot be modified.
   Hours to date	Number of hours for which the depreciation was calculated for this fixed asset, since the beginning of the depreciation calculation. This field is displayed for informational purposes only and cannot be modified.

   The Hour or Hourly term can also be represented as any unit of use of a fixed asset. For example, we could calculate the depreciation accourding to the number of kilometers covered by a car or by the number of tons produced by a crusher. The hours and other usage units are derived from the compilation of production quantities entered or generated in connection with the project corresponding to the asset number. If a specific group was entered in the Hourly Depreciation section of the general settings, only the production transactions linked to this group will be taken in to account.

   3. The Fixed Asset section contains the information related to the evolution of the fixed asset value:

   Field	Description
   Opening Balance	Value of the fixed asset at the beginning of the financial year, updated at the beginning of every year, and used to calculate the annual depreciation to distribute according to the available periods and adjusted payments or not. This amount must be zero if the fixed asset was acquired during the year. The balance automatically carries over from one year to the next. NOTE: The balance must be indicated for the first depreciation year.
   Current Year Additions	Grid containing the acquisitions made related to the asset during the indicated financial year. The acquisitions indicated here increase the value of the fixed asset and therefore the value that will be depreciated during the year. For example, if we spend $20,000 to replace the engine of an excavator, this will increase the life and value of the piece of equipment. SInce this engine will have a longer life, we can process this expense as an asset acquisition (excavator) and therefore increase its value, as well as the depreciation amount that will be calculated every month. Complete the following fields in the grid: Date The value to depreciate will be modified starting the period corresponding to the date entered. It is not possible to enter a date that is not in the indicated year, nor in a period for which the depreciation was already performed. Amount Value at acquisition. This amount will be added to the value to depreciate, starting on the indicated date. Depreciation Depreciation amount that has already been calculated in the acquisition amount indicated in the previous field, during the acquisition. This amount will be added to the depreciation already calculated for this piece of equipment, which will come increase the fixed asset depreciated amount at the end of the year, and therefore decrease its net value.
   Current Year Disposals	Grid containing the disposals performed, related to the fixed asset, during the indicated financial year. The disposals indicated here can be resold, we can therefore process the removal of the original engine, like a disposal on fixed asset and therefore decrease its value and the depreciation amount that will be calculated every month. For example, if we replace the engine of an excavator for a more perfoming one, but the original engine is still good and can be sold, we can therefore process the removal of the original engine as a fixed asset disposal and therefore educe its value and, consequently, the depreciation amount that will be calculated every month. During the final disposal of an asset, for the system to automatically calculate the disposal proit and loss, complete the following fields: Date This is the disposal date. The value to depreciate will be modified from the period corresponding to the date entered. It is not possible to enter a date that is not part of the indicated year, nor corresponding to a period for which the depreciation calculation has already been performed. Amount Disposal value. This amount will be reduced from the depreciation value, from the indicated date. Depreciation Depreciation amount already calculated on the disposal amount indicated in the previous field, when acquired. This amount will be added to the total depreciation amount on disposals, which will come decrease the fixed asset depreciated amount at the end of the year, and therefore inscrease its net value.
   Closing Balance	Value of the fixed asset at the end of the indicated financial year. This value is calculated according to this formula: Balance at the end of the year = Balance the the beginning of the year + Sum of yearly acquisitions - sum of yearly disposals This balance is automatically carried forward to the Opening Balance field of the next year when calculating the annual depreciation. This field is displayed for informational purposes only and cannot be modified.

   4. The Depreciation section contains information concerning the evolution of the fixed asset depreciation value. We also find the information concerning the final disposal of the fixed asset:

   Field	Description
   Opening Balance	Total amount of the fixed asset at the beginning of the year. This amount can be zero if the fixed asset is in its first depreciation year. This amount can also be entered manually if the depreciation calculation must start with an already depreciated value and if this value was not entered in the Additions table during the year. The balance is automatically carried over from one year to the other.
   Total Depreciation on Additions	Amount already depreciation for acquisitions made during the year. This amount corresponds to the sum of amounts displayed in the Depreciation column of the Acquisition table during the year. This field is displayed for informational purposes only and cannot be modified.
   Depreciation for this Year	Depreciation amount that remains to be taken for the current year. This field is only displayed when the chosen calculation method is Linear or Declining. This amount is calculated by the software, taking into account the value to depreciate, the depreciation method, and the sums already depreciated to date. This field is used for informational purposes only and cannot be directly modified. However, it is possible to influence the calculation in the Advanced Calculation window, available by clicking on the button to the right of this field.
   Remaining Periods to Depreciate	Number of periods left to depreciate in the current year. The number of periods left to depreciate is calculated using the number of periods checked in the Linear Depreciation or Declining Depreciation pannels from which have been substracted the number of periods for which the depreciation was already accounted (information displayed in the Depreciation pannel). The value displayed in this field is also displayed in a field with the same name, in the Depreciation pannel. This field is displayed for informational purposes only and cannot be modified.
   Depreciation Amount by Period	Depreciation amount to take in each period that remains to be depreciated for the current year. This field is calculated by dividing This year's remaining depreciation amount by the Number of Periods that remain to depreciate. The value displayed in this field is also displayed in a dield with the same name, in the Depreciation pannel. This field is displayed for informational purposes only and cannot be modified.
   Total Depreciation on Disposals	Amount depreciated on the disposals performed during the year. This amount corresponds to the sum of the amounts displayed in the Depreciation column of the Current Year Disposals table. This field is displayed for informational purposes only and cannot be modified.
   Closing Balance	Total depreciated value of the asset. This amount can be zero if the asset is in its first depreciation year. This amount is calculated using the following equation: Balance at the end of the year = Balance at the beginning of the year + Total depreciation on acquisitions + Total depreciation for the year - Total depreciation on disposals At the end of the financial year, during the annual depreciation calculation, the balance is automatically carried over to the Opening Balance of the next depreciation year. This field is displayed for informational purposes only and cannot be modified.
   Net Book Value	Current accounting value of the asset. This amount is calculated according to the following equation: Net value = Asset balance at the end of the year - Depreciation balance at the end of the year
   Disposal Date	Accounting date in which the asset was sold or definitely stopped being used.
   Disposal Amount	Amount obtained when disposing of the asset, if it was sold.
   Profit or Loss on Disposal	Profit or loss amount calculated upon the disposal of a fixed asset. This amount is calculated according to the following equation:  Profit or loss on the disposal = Disposed product - Total disposal amount during the current year + Total depreciation on disposals NOTE: The Total Depreciation on Disposals corresponds to the sum of amounts entered in the Depreciation column of the Current Year Disposals table. For the Profit or Loss on Disposal to be calculated, the following conditions must be met: The asset's balance at the end of the year must display zero. This can be done by adding a line in the Current Year Disposal table and by indicating the value in the Amount column, equal to the end of year balance. The depreciation amount at the end of the year must display zero. This can be done by adding a line in the Current Year Disposal table, and by indicating a value in the Depreciation column, equal to the end of year amount. When the Profit or Loss on Disposal is calculated and displayed, the button is displayed to the right of the amount and gives access to a window in which the calculation is detailed.

   5. The Current Year's Depreciation section allows to view the amounts calculated for each period.
3. Enter the required information in the Allocation tab:
   1. Project section:
      • A Project, an Activity, and a Group are required, for both the Expense part and the Accumulated Depreciation part.
      • During the transfer of depreciation transactions, a Project Transfer type transaction will be generated, after charging the values to projects in question.
      • A journal entry will also be generated, during the transfer of the Project Transaction.
      • If the asset has an Equipment type, it is logical that the project to which the depreciation will be charged is the same as the project representing the asset.
      • The Calculated Value fields allow to see the default values from the categories and groups.
      • When the Project choice is activated, it is acceptable that certain default values come from the Categories and Groups (i.e. the project and activity) and that others were specifically entered for the current asset (i.e. the group). Certain default values can also come from the Category and others from the Group, for a same asset.
   2. General Ledger section:
      • A general ledger account is required, as much for the Expense part as for the Accumulated Depreciation part.
      • When transferring depreciation transactions, a Journal Entry transaction type will be generated, in order to charge the values to the GL accounts in question.
      • The Calculated Value fields allow to see the default values, which come from the categories and groups.
4. Click on the Save icon.

 

See also

• Project-to-Project Transfer
• Monthly Depreciation Calculation
• Yearly Depreciation Calculation
• Enter Production

 

Last modification: September 20, 2024