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25Has anyone managed to get Dynamics GP to recalculate depreciation correctly under GAAP standards after a change in the remaining life of an asset? Under GAAP, a change in accounting estimate such as this is not retroactive, thus only future periods should be recalculated and no financial statements need to be restated. The new depreciation should equal the remaining net book value divided by the remaining life. For example an asset with a cost of £18,462.50 was placed in service January 29 2018 and was set to use the Straight Line Depreciation Method over a 5 year lifespan, and the Next Month averaging convention. The monthly periodic depreciation amount was calculated at £307.71 per month. The first month that depreciation was taken for this asset would be February 2018.
Depreciation was ran monthly on the asset up to September 30th 2021. At this point the LTD depreciation would be 44 months @ £13,539.17 and the remaining NBV = £4,923.33.
The lifespan of the asset was then determined to be only 4 years not 5 requiring a recalculation of the remaining depreciation. The revised end date for depreciation then became 31/01/2022. Under GAAP accounting there should be no change to depreciation already taken off the asset and the NBV £4,923.33 should be depreciated equally over the remaining 4 months life. This needs to depreciate the four remaining months at £4,923.33 / 4 = £1,230.83 per month.
Dynamics GP offers 3 options to recalculate after changing the asset life, 1: Reset Life To Date, 2: Reset Year To Date or 3: Recalculate. From these option 1 & 2 are not suitable as both will cause previous amounts to be restated. So the only option is to use option 3: Recalculate. Because of this I would expect to also change the Depreciation method on the asset to Straight Line Remaining Life when changing the lifespan to achieve the results required under GAAP.
The problem is the formula used by Dynamics GP still bases the recalculated depreciation amount on information from the the beginning of the current financial year rather than recalculating starting at the Depreciated To Date on the asset. This results in the remaining depreciation not being evenly spread over 4 months @ £1,230.83 as required. Instead it is overstating the amount for the remaining 3 months in the open year @ £1,440.37 per month and then in month 4 there is an understated final amount of £602.21.
I have spent a considerable amount of time experimenting with different methods to try and achieve the results under GAAP but it seems it is just possible in Dynamics GP. If anyone else has come across this problem, I wonder if they ever managed to find a workaround to make GP spread the remaining value of an asset evenly across the remaining life as needed? Otherwise was an alternative solution found other than retiring the asset and creating a new one with just the remaining nbv as cost and the depreciating over the number of days remaining on the retired asset.
Also is anyone able to confirm that this is still an issue in newer versions of GP or has it been fixed in any later versions?
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