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Can any one clear me that How Fixed Asset in GP calculates the Depreciation value. when RESET YEAR OR RESET LIFE OR RECALCULATE OPTIONS are selected. Please include the formula for each example as when I calculate the depreciation value manually, it gives me a completely different amount. I know what exactly Reset Year /RESET LIFE means in Fixed Asset in GP BUT want to know the formula.
Thx!!
As Shannon has alluded to, there is no simple formula to give you for this. I would argue that your scenario is anything but simple, to be honest, and to help identify if the calculations are correct or not would require more information - such as the values of the fields that Shannon mentions impact the amortization calculations. Your example has both a Cost change and a Useful Life change - which means you have 2 things impacting whatever choice you make in the Reset window.
When you add more cost to the asset, unless you change the placed in service date, the choice you make in Reset will make a big difference to your results.
Reset Life = as if the new settings were always in place from the beginning, regardless of when the additional cost was added to your asset. If you added cost and changed useful life to 5 years, it will assume the entire cost should have been amortized for 5 years starting from your placed in service date.
Reset Year = it will recalculate essentially from the start of your fiscal year onwards, similar to the above more or less, as if the new cost was in place at the beginning of the year + the 5 year life was at the beginning of the year, not in August when you changed it.
Based on what you are describing, it sounds like the proper choice in this case is Recalculate which then starts from this point onwards, in calculating depreciation but how that is done depends on depreciation method, averaging convention etc. If you're using Straight Line Original Life, adding life and cost might mean you want to change the method to Straight Line Remaining Life instead to get what you're trying to achieve - spread the cost/NBV out over the remaining life now that it's increased with a new component.
I hope this helps.
Jen
Hello Shannon,
Thanks for the reply but I had already gone through this document and I agree that there are multiple fields which provides the reason to calculate the depreciation cost but my scenario is very simple that If an asset was purchased lets say last year in 2018 March 5th, placed on a service on April 05 2018 and after a year If I add a new component in the same Fixed asset Machine in August 2019 which actually increase the life of that primary Asset which was originally purchased on March 05, 2018 . After addition of this new component the life of my original Fixed Asset has become 5 years now whereas the time when this original fixed asset was purchased the life was 4 years but after adding up a new component the life of my Asset changes as 5 years then how these RESET YEAR OR RESET LIFE OR RECALCULATE will calculate the Depreciation cost.
Since I tried to calculate the depreciation cost manually and since my calculation was showing a different amount than what MS Dynamics GP showed me so I was wondering that what did I miss .and that is the reason I am more interested to have the formula rather than description.
Thx
Hi there,
The below referenced KB article tells you what each option does:
support.microsoft.com/.../information-about-changing-a-depreciation-sensitive-field-in-the-asset
As for the how GP recalculates depreciation, that depends on what each field is set to for each asset, like depreciation method, life, averaging convention, cost basis, etc. There is not one formula, it looks at all the options selected to calculate depreciation.
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