Ready, Set, Depreciate

Sage Fixed Assets–Depreciation provides users the flexibility to enter and report depreciation numbers based on their specific company requirements - Some aspects of depreciation reporting and data entry require advanced steps to achieve the desired results.

The old saying of “garbage in, garbage out” holds true when attempting to make asset changes and running reports. How accurate individual asset data is entered and changed directly affects the depreciation numbers on reports.

Note: Before attempting any asset modifications or depreciation reporting for a past or future period, a backup of the company should be created for comparison purposes or if recovery of the pre-change data is needed.

Making changes to asset data fields that are critical to calculating depreciation.

There may be instances when an asset may need to be modified after depreciation has already been run. For instance, a rebate may have come in and the acquired value may need to be modified or the estimated life may need changing due to reclassification of an asset.

Sage Fixed Assets–Depreciation is flexible on how the depreciation that has already been taken on the asset can be handled. When an asset’s critical field is modified, Sage Fixed Assets–Depreciation prompts the user to first confirm that the changes should actually take place. Once confirmed, it gives the user options on how the depreciation already calculated on the asset should be handled:

Placed-in-Service date– This option resets depreciation back to the Placed-in-Service date of the asset. The Current Year to Date and Current Accumulated fields are reset to $0. When depreciation is run again on this asset, it starts from the Placed-in-Service date based on the new changes made to that asset.

Beginning date– This option resets depreciation to the date in the Beginning date field. The Current Year to Date depreciation is reset to the value in the Beginning Year to Date field and the Current Accumulated depreciation is reset to the value in the Beginning Accum field. Running depreciation through the beginning date results in the Depreciation This Run being $0., since depreciation is not actually being calculated on this asset but simply displaying the depreciation amounts in the Beginning Year to Date and Beginning Accum field. If the Beginning Date field has no value, then the Beginning date option is not available for selection.

Period Close date– This option resets depreciation to the date a period close was last performed on the asset. The Period Close date field shows the last time a period close was performed on the asset. The Current Year to Date depreciation is reset to the amount in the Period Close Year to Date field and the Current Accumulated depreciation is reset to the value in the Period Close Accum field. If the Period Close Date field has no value, then the Period Close date option is not be available for selection.

Current Thru date–This option keeps the depreciation from the last time depreciation was run on the asset. The Current Through Date shows the last time depreciation was run on the asset. To keep the current depreciation intact, the depreciation values are populated into the Beginning fields. The Current Through Date value is copied into the Beginning Date field, the Current Year to Date value is copied into the Beginning Year to Date field, and the Current Accum value is copied into the Beginning Accum field. Since the depreciation is being saved on the asset, depreciation cannot be calculated on the asset prior to the beginning date.

Does the asset change make the asset under-or over depreciated?

An-under-depreciated asset is an asset that’s been modified, which could mean a change to the asset’s estimated life or acquisition value sometime within the asset’s life after depreciation was calculated.

If the company’s assets have not been set up to take any adjustments and the asset is using a non-adjustable depreciation method such as straight line, then the depreciation method also needs to be changed to a depreciation method that can adjust to the new values. For instance, if the original depreciation method is straight line full month, then the depreciation method can be changed to RV (remaining value over remaining life) since they calculate identically. The only difference is that remaining value over remaining life can adjust depreciation based on new values. A complete list of depreciation methods and how they calculate is listed in the User’s Guide located in the Help menu.

If the asset being modified was created as the result of a transfer, then the only option available is the Beginning date option. The Beginning date of the asset contains the point in time that the asset was transferred and cannot be modified earlier than the transfer date. If the asset has to be modified prior to the transfer date, then proper steps should be to reverse the transfer, modify the original asset, and then transfer the asset back to the new location.

If depreciation this Run on the Expense report is incorrect, you can run a report for a past or future period.

One thing to note when running reports for past periods is that assets with beginning dates later than the date you are running the report for may not show on the report if the report is a date-specific report such as the Depreciation Expense report.

Sage Fixed Assets–Depreciation normally runs reports based on the current depreciation period. However, there may be times when you need to run reports for a past or a future period. Normally projection reports such as Annual Projection and Monthly Projection are used to report on periods other than the current reporting period. But if additional information on the assets is required, then depreciation actually needs to be run on the assets to the new reporting period. The steps below illustrate the proper method to run reports for a new reporting period:

1. Go to the Depreciation menu and select Depreciate.
2. If a warning comes up select the OK button.
3. Select the group and the books the depreciation should be run on.
4. Enter the date prior to the new reporting period. For example, if the depreciation is run on a monthly basis and the new reporting period is 12/31/2013, then the date entered should be 11/30/2013.
5. Select only the Update Current Reporting Period check box and select the OK button.
6. Close the report that is generated and change the date to the new reporting period. Using the same example in step four, the date now entered would be 12/31/2013.
7. Select only the Update Current Reporting Period check box and select the OK button.

After following these steps, the new Depreciation Expense report generated and any date-based reports should show the depreciation based on the date entered. If the report being run is a non-date based report and is being run for a past period, the report includes assets that were placed in service after the reporting period. In order to avoid this, the report should be run on a group that excludes assets that were placed in service after the reporting period. If assistance is needed creating customer groups, please see “Understanding Groups” in the Sage Fixed Assets user’s manual located under "Help | User’s Guide."

Once all the required reports have been run, the steps necessary to change the depreciation back to the current reporting period is almost identical to running reports for a past or future period:

1. Go to the Depreciation menu and select Depreciate.
2. If a warning comes up select the OK button.
3. Select the group and the books the depreciation should be run on.
4. Enter the date prior to the new reporting period. For example, if the depreciation is run on a monthly basis and the current reporting period should be 5/31/2012, then the date entered should be 4/30/2012.
5. Select only the Update Current Reporting Period check box and select the OK button.
6. Close the report that is generated and change the date to the current reporting period. Using the same example in step four, the date now entered would be 5/31/2012.
7. Select only the Update Current Reporting Period check box and select the OK button.

The Depreciation Expense generated should be identical to the Depreciation Expense report that was originally generated for the current reporting period.

How to Override/Set an asset’s depreciation for a specific date.

While Sage Fixed Assets–Depreciation is adept at accurately calculating depreciation based on the critical fields entered, situations may occur that require those calculations to be overridden and other values entered in their place.

There are three fields that are used to achieve this:

1. Beginning Date
2. Beginning Year to Date
3. Beginning Accum

The value in the beginning date should be the date that the depreciation is forced for. For example, if the new values being entered are for 5/31/2012, then that would be the beginning date entered. The Beginning Year to Date field should contain the amount of depreciation calculated through the Beginning Date. For example, if the company has a fiscal year end of December and the Beginning Date is 5/31/2012, then the Beginning Year to Date should contain the amount of depreciation that has been calculated from 1/1/2012 through 5/31/2012. The Beginning Accum field should contain the amount of depreciation calculated from the asset’s placed in service date through the Beginning date.

Since the depreciation is being forced on the asset, depreciation cannot be calculated on the asset prior to the beginning date. For example if the asset’s beginning date is 5/31/2012, running depreciation on the asset through 4/30/2012 results in a blank report, and the depreciation amounts for the asset remain through 5/31/2012.

As above, if the asset is located in a company that has not been set up to take adjustments and the asset is using a non-adjustable depreciation method such as straight line, then the depreciation method also needs to be changed to a depreciation method that can adjust to the new values in the beginning fields, or else the asset does not depreciate on schedule. For instance if the original depreciation method is straight line full month then the depreciation method can be changed to Remaining value over remaining life since both calculate identically with the only difference being that Remaining value over remaining life can adjust depreciation based on new values.

A complete list of depreciation methods and how they calculate is listed in the User’s Guide located in the Help menu.

For more information regarding these features, Customer Support can be contacted by phone at 800-331-8514 or by email at fixedassetssupport@sage.com.