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Depreciation Calculation

Jan 18, 2017 at 10:05 AM

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Hi Experts,

For all our assets, we are using a depreciation key that calculates equally per month based on the remaining useful life of the asset.

Here is our scenario:

Asset 1234 originally has a useful life of 1 year with acquisition value of 5,600

Depreciation per month is 466.67 (5600/12months)

Depreciation started last February 1, 2016

From Feb to December 2016 (11 months) we already depreciated 5,133.33 so the remaining value to be depreciated this January 2017 is 465.67.

Just today, we changed the useful life of this asset from 1 year to 2 years. When we checked the planned depreciation for 2017, it distributed the remaining value of 465.67 to 2 months only (Jan-Feb). Isn't it supposed to divide the remaining value of 465.67 to the new unused life of 13 months?

Thanks.

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11 Answers

Mukthar Ali Ahamed N Jan 19, 2017 at 10:08 AM
1

Hi,

Yes, you are right. And also the depreciation is posting based on useful life. So the system is posting correctly. The calculation will be:

APC - 5600

Accumulated depreciation - 5133.33

Depreciation after change useful life- 5400/24=233.33

Period 1 is 233.33

After posting the NBV is 232.34 and the amount is posted as depreciation for period 2.

Regards,

Mukthar

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Bernhard Kirchner
Jan 19, 2017 at 01:36 PM
1

Hi Elli,

It seems that the depr. calculation stops at net book value zero.

Is this not your intention?

It seems that you have not allowed a negative net book value in tr. OADB or in the depr. key (NBV below zero: No)

best regards

Bernhard

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Bernhard Kirchner
Jan 18, 2017 at 04:01 PM
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Hi Elli,

1) Which seating do you have in OAYR (smoothing or catch-up)? - see SAP note 1562637

2) In the attachment I see that the useful life finished in period 2 / 2018 , but you say that you are in 2017 - right?

2) Do you have a memo value, scrap value or cut off value?

best regards

Bernhard

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elli C Jan 19, 2017 at 01:41 AM
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Hi Sir Bernhard,

Here's our setting in OAYR.

The asset depreciation actually started last 2016 and is supposed to finish on January 2017 (based on the original 1 year useful life). Just yesterday (01/18/2017), we changed the asset useful life in AS02 from 1 year to 2 years.

We actually expected that the remaining value of 465.67 will be distributed equally to the additional 1 year (12 months) that we added to the asset. But the system automatically distributed the remaining value of 465.67 to January and February 2017 only.

Thanks.


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elli C Jan 19, 2017 at 02:49 AM
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By the way, we are using the following setting for our depreciation key:


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Mukthar Ali Ahamed N Jan 19, 2017 at 05:45 AM
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Hi,

After change the dep.key, have you run AFAR for the asset?

Regards,

Mukthar

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elli C Jan 19, 2017 at 06:09 AM
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Hi Sir Mukthar,

No, we have not run AFAR for the asset. Actually, we only changed the useful life and not the depreciation key.

Thanks and Regards.

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Mukthar Ali Ahamed N Jan 19, 2017 at 07:49 AM
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Hi Eli,

Even if you changed the useful life, you have to run AFAR. Until you run the transaction code, you cannot get correct values. However, your dep.key is based on useful life, so definitely it will impact.

Regards,

Mukthar

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elli C Jan 19, 2017 at 08:34 AM
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Hi Sir,

I think our problem is also on the multi-level method which we have set in AFAMS. We are using Base Value based on Acquisition Cost. Maybe we have to change this setting.

Thanks.


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elli C Jan 20, 2017 at 04:14 AM
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Hi All,

Thank you for your answers.

We will just create a new multi-level method using Net Book Value with Proportional Value Adjustments distributed over the remaining useful life.

Regards.

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