New Depreciation Methord as per Schedule II of Company ACT 2013

[Former Member]

Dear Team,

Legal Requirement

As per Schedule II of Companies Act 2013, every individual assets life is defined by keeping 5% residual value.

This notification changes have not yet implemented in SAP due to which we are unable to depreciate Fixed Asset as per Govt. rule.

This is been highlighted by our Chartered Accountant & need to implement ASAP.

Please have a look at attached Govt. Notification for same.

Regards

Vishal Kambare

+91 986 725 4565

[parveen_kumar6 · Accepted solution]

Hello Vishal

Salvage value entered manually in the fixed asset master data is the stop value for the depreciation.You can enter the salvage value to stop the depreciation of the asset.

You can manually calculate the residual value and then enter the same in the salvage value.

Thanks

Parveen Kumar

[Former Member · Accepted solution]

Thanks Parveen,

As per my auditor, if we set salvage value to 10%, will this value will be calculated while depreciating material?

If Material Cost is 100 Rs & Salvage value is 10 Rs

then depreciation for first year should be on 90 Rs

(if is it so, then we can use Salvage Value instead of Residual Value)

[parveen_kumar6 · Accepted solution]

Hello Vishal

The impact of the salvage value on the depreciation differs based on the configuration of the depreciation method.

Depreciation calculation ends when the book value reaches zero or at the end of the planned useful life of the asset. The useful life can be reduced if you defined a salvage value. You define the salvage value as an absolute amount or as a percentage of the acquisition costs. If you enter both, the percentage is used by default.

Depending on the depreciation method, depreciation can be calculated in either of two ways:

1. 1. Depreciation is calculated without considering the salvage value and ends when the salvage value is reached
2. 2. The salvage value can be deducted from the depreciation basis at the start of depreciation

All the depreciation methods in India follow the first option.So if you are using Indian depreciation methods,then the depreciation would be calculated as follows:

If your asset has a useful life of one year, then system would stop the depreciation after the net book value reaches 10. In your case, system will only calculate the depreciation until 11th period and there won't be any depreciation in 12th period.

You don’t need to create new depreciation methods if the this option meets your requirement.You can just maintain the Salvage Value (Percent) in the Fixed asset.

Thanks

Parveen Kumar

[Former Member · Accepted solution]

Hi Parveen,

Thanks for suggestion.

can you please give me sample snapshots of one of asset configured as per scheduled II

with defined life of asset & which template to be use.

as we can not have a tele call, a document will help me further.

[HarshalVakil]

Hello Vishal,

We have received your incident and also checked the attached file from the incident.

As I understand, you would like to depreciate asset by keeping 5% of residual value.

You can achieve this by maintaining salvage value.

We would set the salvage value in the system, if there is some residual value of the asset.

Go to fixed asset,

Master data tab

Asset valuation sub tab

Select the valuation view

Under current valuation view setting

find the fields salvage values, Salvage value (Percent)

Please mark this thread as closed, if this answers to your concerns.

Regards,

Harshal

[Former Member]

Hi Harshal,

i cannot add / edit depreciation activity as its not in my current scope

Can you send me step by step guide to add this activity in Current Scoping OR Project

Also how to add one customized depreciation entry in Depreciation Activity

[anantharaman_l]

Hi,

  The Salvage Percent (or amount) is maintained in the individual assets. You could maintain it under the Fixed Assets --> Edit Master Data-> Asset Valuation tab details

Best Regards
Anantharaman L