Fixed Assets: Reducing balance method creates incorrect depreciation adjustment on asset disposal

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Posted on by Community Member Microsoft Employee

Hi,

I am using AX2012 R3 and I have the 'Automatically create depreciation adjustment amounts with disposal' option ticked in the Fixed Asset parameters.

I would like to know whether there is a bug with the Reducing balance depreciation method where AX creates a depreciation adjustment transaction on disposal of the asset to offset all posted depreciations - which results in the net book value to be the same as the original acquisition cost. Please refer to the screenshot for an example:

2806.Screenshot.png

Here is the Depreciation Profile setup for Reducing Balance

6318.Screenshot.png

Thanking you in advance for your time.

Sarita

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Ankit Life 570 on at

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Fixed Assets: Reducing balance method creates incorrect depreciation adjustment on asset disposal

Hi,
Have you find solution to this issue.
Ludwig Reinhard Microsoft Employee on at

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RE: Fixed Assets: Reducing balance method creates incorrect depreciation adjustment on asset disposal

Hello Sarita,

Sorry for the late respone.

I would like to know if you get a different result for the reducing balance method if you use a value model rather than a depreciation book.

Can you test that and verify the outcome?

Best regards,

Ludwig
Community Member Microsoft Employee on at

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RE: Fixed Assets: Reducing balance method creates incorrect depreciation adjustment on asset disposal

Hi Ludwig,

Do you have an answer for me please?
Community Member Microsoft Employee on at

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RE: Fixed Assets: Reducing balance method creates incorrect depreciation adjustment on asset disposal

Thank you for your swift response, Ludwig.

Let me provide another example which might help exhibiting the issue more clearly.

I acquired asset PEG00038 on 10/11/17 for $5000. The following books are attached to the asset:

Value model: Straight line, Service life = 20 years

Depreciation book: Reducing balance, percentage = 20

I ran the depreciation (for both value model and depreciation book) up until 31/05/18. No depreciation was run in June and I scrapped the asset on 26/06/18.

With the 'Automatically create depreciation adjustment amounts with disposal' option enabled, AX should automatically calculate and post the depreciation from 01/06 to 26/06/18 as a depreciation adjustment transaction - as part of the disposal-scrap automatic postings.

I agree with the automatic disposal transactions created by AX for Straight Line:

However the Profit/Loss amount for Reducing balance is incorrect. This is due to the incorrect depreciation adjustment amount. The depreciation adjustment amount from 01/06 to 26/06 should be -72.22 (5000*20%/12 = 83.33 monthly and 72.22 for 26 days)

Sarita
Ludwig Reinhard Microsoft Employee on at

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RE: Fixed Assets: Reducing balance method creates incorrect depreciation adjustment on asset disposal

Hi,

Your profit from the sale is (18000-16171,72) = 1828,28. This amount is reflected in the profit -181,82 and the depreciation adjustment 2010,10

I assume that your settings and the posting conventions are responsible for the postings that you see but cannot identify a problem.

The complete depreciation is reversed (2010,10), which is a standard behavior in AX.

The sales value compared to the original acquisition value then results in the profit of 181,82 shown.

Why do you expect a depreciation adjustmen tof only 191,92?

Best regards,

Ludwig