Depreciate the FA Object equally over the Remaining Periods using the new 'Net Value' after Impairment.
Hi,
Currently, after the Net Value of the Object is reduced using ‘Change Net Value’ option due to impairment, still the system depreciates the Object with the same depreciation amount per period before Impairment. The depreciation is NOT recalculated based on the new Net Value after Impairment.
In order to change this behavior and equally distribute the new Net Value after impairment over the Remaining Periods, documentation suggests the following:
Assuming the object is depreciated using Straight Line method until Impairment, how can I change the Depreciation Method of the Object to Remaining Value over Remaining Life as suggested in the Documentation?
Appreciate your guidance on this regard. Thank you!
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Hi,
My understanding of the question may be inaccurate. I believe you can go to the object / book record and change the depreciation method.
You would first define a new method X and then change the method on the object to the new method X. You can do this for one object first, then change multiple objects. Upon changing the method, you will probably be asked to fill a reason.
With the new method - you may (probably will) run into errors when calculating the depreciation. Depending on settings of the old method the calculation probably did not “look” forward in terms of remaining life. The new method per my previous testing will certainly “look forward” over the remaining life of the assets. Why is this an issue? Well, your fixed asset periods would need to cover the future periods. For example, assume a 25-year asset with acquisition date of 10 years ago. The remaining life would be another 15 years. Depending on the method you set up, you will need accounting periods and depreciation periods going out 15 more years (you may not have periods going out that far). With the other method you were probably using, IFS probably looked back in time.to validate the depreciation periods.
Hope this helps.
My bad, if I did not understand the question.
Hi @Thomas Peterson thank you for your reply. I am trying to change net value of an FA Object and change the depreciation calculation to be based on the New Net Value without picking the Acquisition Value for depreciation. Changing the depreciation is possible using the Object/Book Record but my issue is, when it comes to the Depreciation Method, are there any specific parameters I need to select so that the system behaves accordingly? I am trying to find that.
Is it also possible to change the Remaining Lifetime of the asset after doing an impairment?
Thank you for your valuable input!
Hello @PathiranaPeshala
You need to have base value type set to Modified Acquisition Value. Then IFS should consider new amount. You can create a new depreciation method copying the existing one, change base value type and run depreciation.
