The calculation of depreciation for an asset uses the following values:
Depreciation is calculated from the Date depreciated to date (or Date depreciate from date for a new asset) in the Asset Masterfile.
Depreciation is calculated to the End Date of the current period, as per Setups.
The method of depreciation as per the Asset Masterfile.
The rate of depreciation as per the Asset Masterfile.
Transactions entered or undone can also affect the calculation by changing the above values, e.g.: the Date depreciated to.
The following should be checked.
If the asset is newly purchased
Check the relevant dates. Depreciation will ordinarily be calculated from the Purchase date to the End Date of the current period for a new asset, this could result in more or less than one period's depreciation being calculated.
The period End Dates are listed in Setups, Asset Management, Options on the Periods tab.
The Purchase date is found at Masterfiles, Assets, Enquire, Financial Info tab.
The Purchase date can be overridden by entering a Date depreciate from on the Masterfile, Depreciation Methods tab that is different to the Purchase date.
Check the Method of depreciation on the Masterfile, Depreciation Methods tab.
Check the Deprecation rate on the Masterfile, Depreciation Methods tab.
If the asset is newly entered
For a newly entered asset that uses the Diminishing Value method of depreciation, if the Purchase date was in a previous Financial Year, as determined by the periods entered in Setups, Asset Management, Options, Periods tab, the depreciation will be incorrect because the Diminishing Value method requires the Opening Written Down Value which is only stored in Asset Management after an End of Year. If the asset was entered in the current year then that value would not have been recorded and so the Diminishing Value method then uses the Purchase Cost to calculate depreciation. In this case there are two options to correct depreciation:
Restore Asset Management back to before End of Year was run and enter the new asset. Then roll to the new year and re-enter current year data as required:
This option is only viable if the number of transactions is small.
If your Asset Management is held within your accounts company, then restore to a copy company and use Copy Data Files to move the restored Asset Management data to your live company.
Alternatively, either:
Correct the depreciation each period with a negative Special.Depreciation transaction, in the next Financial Year depreciation will again calculate correctly; or
Allow the depreciation to be incorrect for the rest of the year. Then in the last period correct the year's depreciation with a single negative Special Depreciation entry. In the new Financial Year depreciation will then calculate correctly.
If the asset is not new
If the asset is not new, then there are a few possibilities
The depreciation calculation is date based and will vary from month to month depending on the number of days in the month.
A Special Depreciation transaction may have been entered that altered the total depreciation for the period.
A Depreciation Rate Change transaction was entered that caused depreciation for the period to be different to prior periods.
If transactions were undone, this could cause a variation depending on how many transactions were undone and if changes were also made to the Masterfile.
Period were set up incorrectly in Setups, Asset Management, Options on the Periods tab.
Depreciation of prior months was missed in another way and the Date Depreciated To in the Asset Masterfile Balances and Activity tab was incorrect at the start of the current period.
Revaluing an asset may not change the cost of an asset, so that if the Cost Price method is used, and the cost of the asset was revalued up to a value less than the original cost, then the original cost will still be used to calculate depreciation, not the revalued book value:
Under UCA, the revalued Book Value should be used. The only way to achieve this is use Transactions, Assets, Undo and Undo all transactions for the asset so as to make it Inactive.
Then the Asset Cost field can be changed to the Revalued amount.
On activating the asset again, the depreciation will then calculate correctly on the new Asset Cost.
For audit purposes this process should be documented in the Memo section of the Asset Masterfile.