Dynamics Community Forum Thread Details

Change fixed asset depreciation profile once asset has been depreciated.

Dear D365 Finance Community

Overview of fixed asset issue

We have an issue with our fixed assets in D365.

The client went live last year (2024) and migrated their fixed assets. They are using three fixed asset books ACTUAL, FED, and STATE.

When they were setting up the deprecation profiles for the FED and STATE books, they used 200 % reducing balance – please see below. But they did not include an alternative deprecation profile. Because of this the assets are deprecating well past the service life because it is a 200 % declining balance.

Example

In the example below I tried to add an alternate deprecation profile and received this message (cannot edit the alterative deprecation profile)
For this asset you can see the service life is 5 years with 20 depreciation period (18 are remaining)
When you look at the profile below you can see that the asset continues to be depreciated below the remaining 18 periods.

Question

It does not appear that we can add an alternative deprecation profile to an asset that has been deprecated. How can we correct this situation so that the assets are depreciated correctly over the course of there service life. Thanks

Categories:

Dynamics 365 Finance

“AI was used in this reply”.
Correcting Fixed Asset Depreciation Profile in D365 Finance
Issue Summary:

The FED and STATE books were assigned the 200% reducing balance method without an alternative depreciation profile.
This results in continued depreciation beyond the expected service life.
Attempting to add an alternative depreciation profile now results in an error:
"Cannot edit alternative depreciation profile if Depreciation, Depreciation adjustment, Special depreciation allowance, Extraordinary depreciation journals or transactions exist."
Goal: Adjust the depreciation so that the asset fully depreciates within its intended service life of 5 years (20 periods).

Solution Approach
Since D365 F&O does not allow direct modification of the depreciation profile once transactions exist, we need to stop the incorrect depreciation method and adjust the depreciation calculation.

Step 1: Reverse or Adjust Prior Depreciation (If Possible)
If the incorrect depreciation has been recently posted and can be reversed:

Navigate to: Fixed assets > Journals > Fixed asset journals.
Locate and reverse recent depreciation transactions.
Try updating the depreciation profile and recalculate depreciation.

🔹 If reversal is not an option (e.g., prior fiscal periods are closed), proceed to Step 2.

Step 2: Manually Adjust the Net Book Value
If the incorrect depreciation profile cannot be changed, we need to manually adjust the asset’s net book value and ensure proper depreciation going forward.
A. Stop Future Depreciation on the Incorrect Profile

Go to: Fixed Assets > Fixed Assets > Books
Locate the FEDTAX / STATETAX book for the asset.
Set the "Depreciation periods remaining" to 0 to prevent further depreciation.

B. Manually Adjust the Depreciation for Remaining Life

Create a New Fixed Asset Journal Entry:
- Path: Fixed assets > Journals > Fixed asset journals
- Create a Fixed Asset - Depreciation Adjustment journal.
- Enter a depreciation adjustment to bring the asset’s value to what it should be based on its 5-year life.
Manually Depreciate Over Remaining Periods:
- Set up a new depreciation method (e.g., Straight-line over the remaining periods).
- Adjust depreciation manually using periodic depreciation journals.

Step 3: Future Fix – Configure Alternative Depreciation Profiles for New Assets
To avoid this issue in the future, configure an alternative depreciation profile for all newly created fixed assets:

Go to: Fixed assets > Setup > Depreciation profiles
Select the 200% reducing balance profile.
Add an alternative depreciation profile (Straight-line) to ensure that depreciation stops at the expected service life.

Final Recommendation:

If possible, reverse and correct depreciation to apply the correct profile.
If reversal is not an option, stop depreciation on the incorrect profile and adjust depreciation manually via journals.
Prevent future issues by setting alternative depreciation profiles in the setup.