Asset with Multiple Useful Lives

[Former Member]

Hello all --

We have a number of assets that were incorrectly classified as 39-year life assets for U.S. tax purposes at the time they were placed in service. Some of these assets will have a relatively straight-forward change from 39 to 5 year lives. However, there are other assets where they will have to be split into 5 year as well as 7 year and depreciated accordingly. Please see my example below:

Asset #: 12345

Original Cost: $100,000

Original Useful Life: 39

Part #1 $70,000

Useful Life 7

Part #2 $30,000

Useful Life 5

Furthermore, because we did not take enough depreciation in prior years, we will be posting unplanned depreciation to catch up so that the current fiscal year's depreciation will be shown correctly. Part #1 and Part #2 will need to reflect their portion of the unplanned depreciation. Please advise on what the best course of action is.

Thanks in advance!

[Former Member · Accepted solution]

Hi Kyoung

You are wanting to split the $100 000.00 to two assets. I believe that you will have to dispose of it and upload AS91 with the gross amount and accumulated depreciation, within the right classes, be it 5 or 7 years, back-dating depreciation start date and remaining time to depreciate. The next time you run depreciation it should 'catch up' within the first month. Display the planned depreciation.

You can post the FI entries separately.

Let's hear what the experts say though.

Kind regards

Dawn

[madhusoodanan_ramachandra]

Hi,

If I understood your requirement correctly, the solution is straightforward.

Just by changing the depreciation terms, the requirement can be met. The system will automatically catch up the depreciaiton in last depreciated month, if you execute repeat depreciation run or in the next depreciation run, if it is on planned depreciation mode.

Best Regards,

Madhu

[Former Member]

Thanks for your responses.

Would you please go into more detail about "changing the depreciation terms"? Would I have to create subnumbered assets or dispose and create assets with the new life?

[madhusoodanan_ramachandra]

Hi,

I think, you have to create new assets with required depreciation terms and then transfer the value from old asset.

Best Regards,

Madhu

[Former Member]

Hi

As Madhu said. Create to new classes one for 5 years and one 7years if you don't already have that. You can then do a transfer to those classes using TC ABUMN with partial transfer amount (gross amount I think). In the new asset master set the depreciation start date the same as the original date (use key LINS if no other). Test on a test system using the number of useful life left. Do that for the remaining amount on the original asset to the other classes. View the asset in Asset Explorer, it should show an adjustment to depreciation in the planned tab, which will post the next deprec. run

I think that will work.

Kind regards

Dawn