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Dec 17, 2013 at 10:16 AM

Change of useful life within asset


Dear all,

we need to change the useful life of a capital lease asset due to a leasing contract extension. The respective asset was capitalized 2010-04-01 with a planned useful life of 6 years and 6 months until 1016-09-30.

We are using straight line depreciation (dep. key LINS). Resulting monthly depreciation amount was DEP_OLD = Acquisition value (APC) / 78 (6,5 years in months). DEP_OLD has been posted until 2013-09-30 --> 42 times

Now the leasing contract has been extended until 2021-09-30 --> The asset's usefule life therefore is 14 years and 6 months. If known from the begining the monthly depreciatin amount would have been APC / 174 (14.5 years in months) = DEP_NEW. We face the situation, that we posted to much depreciation in the past.

Accounting now wants the new useful life to take effect as of 2013-10-01. I would expect:

  1. depreciation adjustment (write up) for the persiod from 2010-04-01 - 2013-09-30 calculated as follows: DEP_ADJ = 42 * (DEP_OLD - DEP_NEW).
  2. planned depreciation as of 2013-10-01 with the DEP_NEW --> Here is my problem: The depreciation value for the remaining three months (oct, nov, dec) of 2013 is to high. Instead of using APC - value adjustment until 2013-09-30 the system uses APC - value adjustment until 2012-12-31 --> From my point of view the base value is wrong and this needs to be adjusted in the depreciation key?! Please advice on how to solve this issue.

Thanks in advance for your support.

BR. Jo