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Calculation base for depreciation- Acquisition cost or Net Book Value?

varun_panicker
Explorer
0 Kudos

Hi Friends,

An intriguing query has come up, which concerns the calculation base for depreciation of fixed assets.

Let's say an asset has been acquired for $100, and the useful life is 10 years. The annual depreciation is $10 and it has been depreciated for 2 years.So the accumulated depreciation is $20, and the net book value is $80.

Now the useful life is changed to 5 years. So will the depreciation henceforth be 80/3 (NBV at start of year/ remaining useful life at start of year) or 100/5 (Acquisition cost/ Total useful life)? Are there any settings that govern this, or is this a hard coded logic?

Regards,

Varun

Accepted Solutions (1)

Accepted Solutions (1)

former_member198650
Active Contributor
0 Kudos

Hi Varun,

The multi level method for the depreciation key has below settings

If your existing depreciation key does not have this settings, then create a new depreciation key and the multi level method and assigned this key to the asset. After change the dep.key for the asset. You have to run AFAR for it. Then only dep.changes will effect with new.dep.key.

Regards,

Mukthar

varun_panicker
Explorer
0 Kudos

Excellent Mukhtar! Thank you very much! Please let me know how to assign points to you.

Regards,

Varun

former_member198650
Active Contributor
0 Kudos

Please check below link for close the issue.

Answers (0)