Fixed Assets Depreciation Calculation

[Former Member]

Dear All

We are facing an issue in Fixed Assets Depreciation calculation. In the last year of Fixed Assets, system is not following the proper depreciation calculation.

For E.g

An Asset's purchase value is 2500 and it is acquired in Oct, 2008 with 5 years useful life. Depreciation calculation method is Straight Line and normally, system should charge 41.67 per month depreciation.

For the first 4 years of this assets. system charged normal value but in the last year, the calculation changes. Last year Book value is 125 and as per per month depreciation of 41.67, this book value should be consumed in 3rd month of last year. But system is dividing 125 amount by 10 and distributed 25 in 10 months.

For some assets, it is distributing remaining book value in 12 months.

If anyone can help that why system behavior is changed in the last year of fixed asset and what logic system is using to do this.

Regards

Nabeel

[Former Member · Accepted solution]

Hi,

Deprecitation will be depend on:

1. Remaining life
2. Calculation method in Depreciation Type >>> Calculation tab

You should check to see what method is applied for your straight line type.

Hope this helps,

TVSon

[Former Member]

http://help.sap.com/saphelp_sbo882ao/helpdata/en/91/e2779e669043e6aed3edae365ef342/frameset.htm

use this for fixed asserts problems

[Former Member]

Dear SonTran/Keneddy

I understand how system operates with different depreciation methods. But my question is concise to the final year depreciation values. System calculates the depreciation amount as per Straight Line method for all the years but in the last year, it changes the sequence and behave abnormal as example quoted above.

I just want to know why system is changing normal depreciation amount in the last year? What's the logic behind that?

Waiting for a helpful answer.

Thanks

Nabeel

[KennedyT21]

Hi Nabeel Younus...

In your Case its seems like a Bug better raise ticket with SAP and check...

Share the Solution with Us.. Close the Tread

Regards

Kennedy

[Former Member]

Dear Keneddy

Thanks for reminding as I forgot to reply.

The problem was not a bug. I further diagnosed the issue and found the behavior, why system is doing this. Actually, system is working on remaining life of fixed assets. Like in my example, last year net book value of asset was 125 and if system depreciates with normal amount of per month depreciation i.e. 41.67, then this asset should only be depreciated till 3rd month in the last year. But system is dividing 125 amount to 12 months because the remaining life of asset was 12 months.

Hope this will help others also.

Thanks

Nabeel

[KennedyT21]

Hi Nabeel Younus ...

In straight-line depreciation, the asset is depreciated by the same amount each year. This means that the acquisition and production costs are distributed evenly across the entire useful life of the asset. The periodic depreciation amounts are equal to the acquisition and production costs divided by the entire useful life.

Post-capitalization and subsequent acquisitions lead to an increase in depreciation, by the amount which would have been necessary to fully depreciate the addition over the original useful life of the asset. The time period from the beginning of depreciation until the book value of zero is reached is extended.

Calculation Method

• You can use the icon to select a calculation method.

Fixed Assets supports the following calculation methods:

• Acquisition Value/Useful Life
• Percentage of Acquisition Value
• Net Book Value/Remaining Life

Percentage

If you use the calculation method Percentage of Acquisition Value, you enter the percentage rate to be used for the depreciation calculation here. The net book value is always the basis for the calculation.

Check with the link hope helpful

http://help.sap.com/saphelp_sbo2005ao/helpdata/en/1a/50c53f3e0f0228e10000000a114084/content.htm

Regards

Kennedy