Hello Dear Experts,
I am facing some issues with the way the "Automatically create depreciation adjustment amounts with disposal" parameter works.
I have looked into the forum and did not quite identified a close enough solution.
Hopefully, you will help me save the day.
My scenario is a follows:
- An IT equipment is purchased on 01/01/2018 for 1200€
- Its Service life is 2 years
- The depreciation method is Straight line service life
- The asset has a Monthly depreciation of 50€ per month for 24 Months.
- It has been depreciated throughout 2018 for 600€ in total, and up until 31/07/2019.
- At this point, the Net Book Value is 250€.
- On 31/07/2019 the asset is disposed of through Disposal-scrap after the July depreciation amount is posted (disposal happens as of the same date).
- The depreciation until 31/07/2019 is done as a lump sum for simplicity
The result, at the end of the disposal is shown below:
| Voucher |
Transaction date |
Fixed asset number |
Transaction type |
Amount |
Fixed asset group |
Posting profile |
| FACR000316 |
01/01/2018 |
0001 |
Acquisition |
1200.00 |
LAPTOP |
MAIN |
| FAD000316 |
31/07/2019 |
0001 |
Depreciation |
-950.00 |
LAPTOP |
MAIN |
| FADI-00000040 |
31/07/2019 |
0001 |
Depreciation adjustment |
250.00 |
LAPTOP |
MAIN |
| FADI-00000040 |
31/07/2019 |
0001 |
Disposal-scrap |
0.00 |
LAPTOP |
MAIN |
| FADI-00000040 |
31/07/2019 |
0001 |
Net book value |
500.00 |
LAPTOP |
MAIN |
| FADI-00000040 |
31/07/2019 |
0001 |
Profit/Loss |
-500.00 |
LAPTOP |
MAIN |
| FADI-00000040 |
31/07/2019 |
0001 |
Acquisition (prior years) |
-1200 |
LAPTOP |
MAIN |
| FADI-00000040 |
31/07/2019 |
0001 |
Depreciation (this year) |
950.00 |
LAPTOP |
MAIN |
| FADI-00000040 |
31/07/2019 |
0001 |
Depreciation adjustments (this year) |
-250.00 |
LAPTOP |
MAIN |
I was not expecting any adjustment at all since the depreciation for the month was done in full and the disposal happened right after that.
Not only that, but the Net book value is now doubled (by the look of the transaction results), although the right Net book value can be retrieved by subtracting the Depreciation adjustment amount from the calculated Net book value.
Does this scenario look familiar to any of you? Any help would be greatly appreciated.
P.S: Please see below a summary of the setup I have in my system:
| Fixed asset module parameters |
Value |
| Allow multiple acquisitions |
Yes |
| Automatically create depreciation adjustment amounts with disposal |
Yes |
| Calculate prorated depreciation |
No |
| Fixed asset book parameters |
Value |
| Allow net book value higher than acquisition costs |
No |
| Allow negative net book value |
No |
| Depreciation method |
Straight line service life |
| Depreciation year |
Calendar |
| Period frequency |
Monthly |
| Depreciation convention |
None |
| Allow depreciation when placed in service and disposal are in the same accounting year |
Yes |
| Create depreciation adjustments with basis adjustments |
No |
Thanks again!
