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Dynamics 365 Community / Forums / Microsoft Dynamics GP (Archived) / Fixed Assets - Straigh...
Microsoft Dynamics GP (Archived)

Fixed Assets - Straight Line Remaining Life depreciation calculation

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Posted on by Suet Lee 1,345

Hi,

Can anyone explain how Straight Line Remaining Life Depreciation is calculated? I have a scenario where i change from straight line to straight line remaining life depreciation method after I have run depreciation using the first method and increase the Original Life.I can work out the calculations when i do not change the Original Life Years. However, if I increase the Original Life Years from 5-7 Years, I cannot derive to GP's  calculation. Can anyone explain how does the calculation Rem Life Depreciation Calculation work when increasing the Original Life Years?

Sample calculations  without changing Original Life

Initial figure 16,850 for 5 years. Therefore, 1 year is 3,370. 1 month is 280.83. I have depreciated 4 years and 8 months.  If I only change the depreciation method, I will be able to get the figure correctly. That is derived from NBV 7,863.33 with 2 years and 120 days remaining Years and Days. Daily Rate calculated is 7,863.33/850=9.2509 (Daily Rate). Monthly rate is calculated as 7,863.33/28 Months = 280.83 

NBV - daily * 120                    6,753.21
(NBV - daily * 120)/2 years                    3,376.61
(NBV - daily * 120)/2 years/12 mth                        281.38 future monthly dep cost after changed dep method

 

Thanks, Suet

 

 

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  • Suggested answer
    Squishy Worms Profile Picture
    Squishy Worms 15 on at
    RE: Fixed Assets - Straight Line Remaining Life depreciation calculation

    I think I can explain it though you may not like it.  This has been a mystery for years for me but I think I finally understand it.

    I'm assuming you set the book to "Periodic" depreciation so for Straight-Line Orig Life: Periodic Deprecation = (Cost - Savage) / Periods.  Now that's probably what you are expecting for remaining life; but, as you discovered, that is not how remaining life works.

    With Straight-Line Rem Life the periodic depreciation depends on the days in a given remaining year so every year is potentially different.

    First Calculate Remaing Daily = (Cost - Savage - LTD Depreciation) / (Day's Remaining)

    Second Calculate Current Year = Daily Deprecation x Day's in the Current Year

    Last Calculate Current Year Periodic = Current Year Depreciation / Number of Periods in the Current Year

    Because the days in each year vary, the deprecation varies for each year, and therefor the periodic deprecation for each year can vary.

    Due to the above calculations, straight line remaining life will probably never match a different depreciation system.  So you can forget ever matching to your auditors deprecation ledger where switching to straight line is required.

    There is a work around.  When your asset switches over to Straight-Line Rem Life, change it to amortization, set the period to annual, and enter the new annual straight line deprecation amount.  This should make your deprecation for straight line remaining life work like the rest of the world would expect.

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    Re: Fixed Assets - Straight Line Remaining Life depreciation calculation

    Does anyone has any suggestion on this?

    I'm facing the same problem as well...

    THANKS!!

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