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How to depreciate assets fully by end of its useful life?

Friends,

In our company at the end of asset's life many times some small Net Book Value is still left over. This value needs to be 100% depreciated in the last period of the asset. Is there a way to achieve this?

Scenario:-

Asset Value USD 2400/-

Date of Acquisition 01.07.2000

Life of asset 2 years (thus Depreciation rate is 50% derived from life)

Net book value as on 30.06.2002 should be Zero but due to some reason* the Net Book Value on 30.06.2002 is USD 1000/-

This USD 1000/- should be charged off as depreciation in June 2002 depreciation run and make NBV zero. How to achieve this?

I tried maintaining the following setting in Depreciation Key: -

Dep Phase Base Method Decl.bal Prd cont Multilev.meth. Chnge.meth. Ord Dep 1 0011 001 001 001 5 Ord Dep 2 0017 001 001 001

However system calculates the depreciation till June 2002 leaving a NBV of USD 1000/-. It depreciates this USD 1000/- in year 2003 and not in 2002. The Changeover method 5 (change over at the end of the useful life) triggers the new base method 0017 in year 2003 instead of year June 2002.

Help needed...😕


*This happens because this assets was migrated from legacy system with incorrect legacy values

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2 Answers

  • Posted on Jan 08, 2014 at 05:53 PM

    Hi Deepak

    Since this is a one time issue (Out of legacy migration), i would suggest post unplanned depreciation of 1000 USD and close the chapter..

    For future postings, if your depreciation key is based on remaining useful life (i.e. Base Value 24 and REM LIFE tick switched on in the multi level method), you should not face this problem anymore

    WIth the changeover method 5, the change over happens after the useful life has expired i.e. in the next month. In your case, it coincides to be next FY itself

    Br, Ajay M

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  • Posted on Jan 10, 2014 at 09:26 AM

    In case you depreciate straight-line you have to use the straight-line method "net book value over remaining useful life".

    Regards,

    Markus

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