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author's profile photo Former Member
Former Member

increased useful life

Hi,

We made some repair costs to our building, and we decided to capitalize the repair costs to value of the building. Also we decided that repair works incresed/prolonged useful life of this building. We want that NBV and capitalised repair costs would depreciate during the remaining + prolonged periods, i.e.

Initialy useful life was 30 years, after 20 years when we made repair it was 10 years remaining, and we decided that repair prolongs useful life additional 5 years, so in total 15 years.

How to adjust remaining useful life in order to claculate depraciation for the rest period plus additional period smoothly? Because system recalculates depreciation of previous periods and posts positive values and than negative, but we want calculate smoothly for the whole rest depreciation period with negative depr. values.

Please help!

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4 Answers

  • Posted on Feb 09, 2007 at 07:07 AM
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    • Former Member Former Member

      Hi Marius,

      After you have updated your <b>APC value</b> and have changed the <b>depreciation key</b> to reflect the new remaining useful life, use transaction code <b>AFAR</b> to recalculate your depreciation specifying the Fiscal Year you want the recalculation to commence from. You can do this first in <b>Test Mode</b> and check "<b>List Assets</b>" so that you can review what the system would be posting before excuting in Production mode.

      I hope the above helps.

      Do not forget to award the points please.

      Regards,

      Jacob

  • author's profile photo Former Member
    Former Member
    Posted on Feb 09, 2007 at 09:05 AM

    Hi,

    Good morning and greetings,

    Please go through the following SAP OSS Note

    Note 46456 - Subsequent acquisition and production costs

    Please reward points if found useful

    Thanking you

    With kindest regards

    Ramesh Padmanabhan

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  • author's profile photo Former Member
    Former Member
    Posted on Feb 09, 2007 at 11:23 AM

    Hi Marcus ,

    Dep recalculated for the past periods / years will be posted in the current open periods. The system will not post the difference of the past yrs to the remaining useful life...as far I know.

    Cheers

    Kartik

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  • author's profile photo Former Member
    Former Member
    Posted on Feb 13, 2007 at 02:10 PM

    Maybe I have described not so clear my problem. Because it is realy important for us I try to describe more detail:

    According to our internal accounting principles of fixed assets, when

    we made essential subsequent acquisition, e.g. we made repair works of

    the roof of our building; we have to add those costs to initial

    acquisition cost of the building, and to prolong useful life of the

    building. And depreciation calculation must be calculated in this way:

    Initial acquisition cost 1.000.000 monetary units (MU);

    Initial useful life 40 years;

    Monthly depreciation was: 1.000.000/40/12 = 2.083 MU;

    After 20 years we made subsequent acquisition amounting to 200.000 MU

    and prolonged useful life additionally 10 years.

    So in our accounting books planned monthly depreciation after

    subsequent acquisition must be as follows:

    (500.000 + 200.000) / 30 / 12 = <b>1.944</b> MU,

    500.000 MU net book value at subsequent acquisition day = 1.000.000 /

    20

    30 years = remaining 20 years + prolonged useful life 10 years

    But the system calculates in this way:

    Recalculates depreciation of past 20 years and posts difference with

    positive depreciation value to current year planned depreciation:

    1.000.000 / 40 / 12 - 1.000.000 / 50 / 12 = 2.083 - 1.667 = 417 MU,

    417 * 20 * 12 = 100.000 MU

    And only after that in planned future fiscal years system posts

    negative depreciation. For example we made subsequent acquisition in

    December of 2006:

    Period Depreciaiton, MU

    2006/12 +100.000

    2007/01 -2.222

    2007/02 -2.222

    … -2.222

    2036/12 -2.222

    Posting like above are completely inconsistent with our internal

    accounting principles. We need to avoid positive depreciation postings

    at all.

    We need postings as follows:

    Period Depreciaiton, MU

    2006/12 -1.944

    2007/01 -1.944

    2007/02 -1.944

    … -1.944

    2036/12 -1.944

    How to configure depreciation of subsequent acquisitions and prolonging

    of useful life according to our needs?

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