1) Classification
- Opportunity for improvement
2) Brief description
Introduce a standard Unit of Production (UOP) depreciation method within IFS Cloud Fixed Assets.
Currently, customers who require depreciation based on actual asset consumption (e.g., units produced, machine hours, operating hours, kilometres travelled, tonnes mined) must implement custom solutions because IFS does not provide a native UOP depreciation method. This requirement has already resulted in customer-specific customizations and development efforts.
The proposed enhancement would provide a standard depreciation method that:
- Maintains expected lifetime production/usage units.
- Captures actual units consumed for each depreciation period.
- Calculates depreciation based on actual asset usage rather than time.
- Supports manual entry, file uploads, and integrations.
- Provides standard validations and reporting.
This enhancement would improve support for industries such as Mining, Manufacturing, Oil & Gas, Transportation, Construction, and Utilities where asset consumption is directly linked to production output or operational usage.
B. Context and scope
1) Who is affected?
- Customers
2) Frequency
- Frequently
C. Value and impact
1) What is the business outcome?
- Improves productivity or efficiency
- Reduces cost or manual effort
- Enhances user experience
- Enables new capability
- Supports compliance or reduces risk
2) Impact scale
- 5 — Enterprise-wide
3) Workaround
Currently, customers must implement custom solutions to support Unit of Production depreciation. These customizations typically introduce additional fields, user interfaces, calculations, validation logic, and integrations to capture production or consumption data and calculate depreciation accordingly. This increases implementation cost, testing effort, upgrade complexity, and ongoing support requirements.
D. Evidence and examples
Write here:
The requirement has already been identified in customer implementations where a custom Unit of Production depreciation solution was developed because standard functionality was not available. Project discussions confirmed that customers expect depreciation to be calculated based on actual production output and consumption metrics rather than solely on elapsed time.
This requirement is particularly relevant for industries with production-driven assets, such as:
- Mining equipment depreciated based on tonnes extracted.
- Manufacturing machinery depreciated based on units produced.
- Heavy equipment depreciated based on operating hours.
- Transportation assets depreciated based on kilometres travelled.
From an accounting perspective, IAS 16 - Property, Plant and Equipment requires that the depreciation method reflect the pattern in which the asset's future economic benefits are consumed. For many production-based assets, the Unit of Production method provides the most appropriate representation of asset consumption and expense recognition.
Supporting this method as standard functionality would enhance IFRS compliance while reducing the need for repeated customer-specific developments.
E. Additional details
1) Enter support ticket ID reference (If applicable)
No current support ticket reference.
2) Would you like to participate in validation or early testing?
Yes
