Change in Depreciation calculation based on NBV of Asset

[former_member850606]

Dear Gurus

Local Regulatory Authority has proposed few changes to existing Depreciation calculation that have to be implemented by one of our clients.

Proposed Change:

• Original cost of the Fixed Asset shall be the value base for calculation of depreciation.
• The depreciation shall be calculated annually, based on Straight Line Method.
• Once the individual asset is depreciated to the extent of 70%, remaining depreciable value as on 31st March’2023 shall be spread over the modified useful life of the asset.
• The salvage value of the asset shall be considered at 10% of the original cost and depreciation shall be allowed up to a maximum of 90% of the cost of the Asset.

Example: Currently all Asset Classes are being depreciated on Straight Line basis. Useful life of asset is 10 years and it’s purchased for Rs 1000. Now on 31st March’2023, 7 years are passed and NBV of the asset is Rs 300. Now according to the Regulation, the balance useful life of such Asset should be only 2 years instead of 3 years.

Although there are ways to achieve this by adjusting the remaining Useful life manually in the Asset Master, but any manual process is not a viable option for our client since the Asset Portfolio is more than 5 lacs Assets.

Is there any easier approach that can be followed to achieve these changes to Depreciation Calculation without any Manual intervention by the Users ?

Regards

Sid

[former_member850606]

Issue resolved