Fixed asset acquisition after depreciation

Question Status

Verified
Georgek asked a question on 11 Aug 2017 4:50 PM

After the fixed asset is acquired and depreciation started few months back when I add additional acquisition cost to the asset I noticed that system during depreciation proposal ignores the new acquisition amount and calculates based on the old acquisition amount. how can I fix this?

  1. The fixed asset acquired July 1st
  2. first depreciation ran July 31st 
  3. 2 additional acquisition added via investment project Aug 31st by two elimination

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FAD1 responded on 11 Aug 2017 11:01 PM

Hi George,

Can you provide details as to how you added the additional costs to the fixed asset? Did you use a fixed asset journal to add the additional cost to the asset?

Thanks,

Fahad

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Ludwig Reinhard responded on 12 Aug 2017 12:12 AM

Hi Georgek,

In addition to what FAD1 already mentioned, can you share your setups for that fixed asset, especially the value model settings that are made in the different tabs.

Many thanks,

Ludwig

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Georgek responded on 12 Aug 2017 7:19 AM

I am using project accounting to add additional cost. Using the 200_sllr book from demo. USMF

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Ludwig Reinhard responded on 12 Aug 2017 7:53 AM

Hello Georgek,

Thank you for that information.

In addition, we need to know things such as

- when the orginal acquisition was posted

- when depreciations were run

- what postings have been created so far

- when the transfer from the project to the fixed asset occured

It would be great if you could share some screenprints.

This would make things easier to identify.

Many thanks,

Ludwig

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Suggested Answer
Frank Hamelly responded on 12 Aug 2017 8:35 AM

Is the flag 'Create depreciation adjustments with basis adjustments' on in your value model?

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Georgek responded on 12 Aug 2017 3:42 PM

I added additional information hope this is sufficient. thank you all for your help

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Georgek responded on 12 Aug 2017 3:43 PM

Hi Frank, would it be possible to shed more light on this flag? thank you

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Frank Hamelly responded on 12 Aug 2017 4:07 PM

Hi George, I see in your second screenshot that the flag is set to yes under the Depreciation tab.  There's a flag in the Value model (or Book, depending on your version) that defaults this value to all assets if it's switched on.  It's designed to automatically calculate depreciation on the new asset value after an adjustment to acquisition price is posted.

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Georgek responded on 12 Aug 2017 6:11 PM

It does calculate automatically when running a proposal however the proposal amount is based on the original  acquisition amount and ignores the additional acquisition amounts.

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Suggested Answer
Ludwig Reinhard responded on 13 Aug 2017 12:58 AM

Hi Georgek,

Can you create a depreciation proposal for 31 August?

This proposal should include your additional acquisition costs recorded.

Alternatively, you can also check the profile (button) in your book, which gives you a preview of the net book value and depreciations that will occur in the future.

Best regards,

Ludwig

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Georgek responded on 13 Aug 2017 6:04 AM

Hi Ludwig, the profile does consider the new acquisition amount under the posted value. however notice the screen shot I added the depreciation amount is still $10 and this is my issue. if I ran the proposal or check the profile the depreciation amount is $10. I would think the amount will increase to accommodate the new acquisition correct?

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Verified Answer
Ludwig Reinhard responded on 13 Aug 2017 9:14 AM

Hi Georgek,

I had a look at the FA group and the postings made and got something similar in my demo system. The issue in this case seems to be with the depreciation convention (half year) and the depreciation profile (200%).

I tried using the straight-line depreciation convention with a 'full month' depreciation convention and the depreciation amounts were adjusted. Can you test this alternative setup in your demo system?

Do you actually have to use the 200% depreciation profile, which seems to be something US/tax specific?

Best regards,

Ludwig

Reply
Georgek responded on 14 Aug 2017 9:58 AM

Hi Ludwig, I don't have to use 200% so I changed it to SL_service and it seems its working now. I will run few more test but in theory it seems to be working with straight line. thank you!

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Ludwig Reinhard responded on 14 Aug 2017 10:40 AM

Hi Georgek,

I was able to test the multiple acquisition example that you used with the SL_remain depreciation profile.

Do you mind to test this once again, ideally with a 'fresh', that is newly set up fixed asset?

If you still expierence the same issue, then please post some screenshots about the steps you followed so that I can try to replicate this on my machine.

Many thanks and best regards,

Ludwig

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Georgek responded on 14 Aug 2017 2:10 PM

Hi Ludwig, yes it worked for me as well and no issues. I just by mistake posted hour journals that are not capitalize. that was my issue :)

Reply
Verified Answer
Ludwig Reinhard responded on 13 Aug 2017 9:14 AM

Hi Georgek,

I had a look at the FA group and the postings made and got something similar in my demo system. The issue in this case seems to be with the depreciation convention (half year) and the depreciation profile (200%).

I tried using the straight-line depreciation convention with a 'full month' depreciation convention and the depreciation amounts were adjusted. Can you test this alternative setup in your demo system?

Do you actually have to use the 200% depreciation profile, which seems to be something US/tax specific?

Best regards,

Ludwig

Reply
Suggested Answer
Frank Hamelly responded on 12 Aug 2017 8:35 AM

Is the flag 'Create depreciation adjustments with basis adjustments' on in your value model?

Reply
Suggested Answer
Ludwig Reinhard responded on 13 Aug 2017 12:58 AM

Hi Georgek,

Can you create a depreciation proposal for 31 August?

This proposal should include your additional acquisition costs recorded.

Alternatively, you can also check the profile (button) in your book, which gives you a preview of the net book value and depreciations that will occur in the future.

Best regards,

Ludwig

Reply