Hi experts,
Hoping someone can help me in this area as our company is newly integrating with D365 Finance and Operations. I am setting up the fixed assets and have ran some disposal tests. However, the JE is displaying the wrong depreciation adjustment upon disposal and we cannot seem to make sense of it. We are transferring our legacy fixed assets into the system. Please see the examples below.
Place in Service Date " 12/18/2019"
I put the acquisition cost into the system of 200,029.84 with transaction date of 8/31/2022.
I then ran a depreciation proposal and it created two depreciation lines for 11/30/2022:
Depreciation from 12/1/2019-7/31/2022 in amount 42,672.96 and from 8/1/2022-11/30/2022 in amount 5334.12. By this time, the asset has been correctly depreciated up to the sale date (depreciation convention is "full month").
I then disposed of the asset 11/30/2022. I left the credit and debit amounts blank and the offset account as blank in my JE.
My question is why did the system create a depreciation adjustment of 42,450.71?
There shouldn't be an adjustment since the asset has been correctly depreciated up to the sale date. Furthermore, the remainder of 222.25 is equal to 5 days of depreciation changing accumulated depreciation to 4 months and 5 days. How are they coming up with this number as the convention is full month?
Additionally, this is causing a wrong net book value to be recorded. The NBV should be 152,022.76 (acquisition cost (200,029.84) - accumulated depreciation (48,007.08). In this case, it is recorded as being 194,473.47 since it changed accumulated depreciation to 5,556.37 from 48,007.18.
I've attached the asset's book details and the FA parameters below. Please note that the setting to run depreciation adjustments on disposals is turned on. If anyone can give me some insight, it would be greatly appreciated! This is stalling us from further progressing in our implementation. Please let me know if I can provide more information to help provide a solution.
