Asset accounting Part - 6

Depreciation keys creation (Rate+ Methods)

1.    Define base methods

2.    Define declining balance method

3.    Define multi level  methods

4.    Define period control methods

5.    Maintain deprecation key

First steps will be assigned in 5^th step and 5^th step will be assigned in Asset master.

1. Define base methods:

Path :SPRO –Financial accounting-Asset accounting-Depreciation –Valuation methods –Depreciation key-Calculation methods –Define base methods

           

Base method            :0014 Ordinary :Explicit percentage (after end of life)

A)   Ordinary deprecation

B)   Explicit percentage –creation percentages  rate given in Companies Act Schedule XIV

C)   After end of line –If the next box value becomes zero no depreciation should be calculated.

Define declining balance methods

Same path

Give the Char of Depreciation YOUR COMPANY

Enter

Note down decimal  balance 001

002

Decimal factor 2

Max percentage 20

Beginning years :Wear and tear will be less

Acquisition value                 100000

Rate of depreciation                        5%

First year                                            5

Second year                                                 5

Third  year                                         5

Fourth year                                       5

                                                            ---

                                                            20

First 4 years :100000*5% *98% (2% discount as per companies act)

5^th year onwards :100000*5%

Define multi level methods: (Tr code is AFAMS)

same path

select new entries button

multilevel method    :A

Description                :5% SLM

Validity star               :Select from ordinary deprecation on star date

Save

Press enter to save in your request

Double click on levels folder

Select new entries button

Acquisition year       :9999

Year                            :999

Periods                      :12

Base value                :Select 01 Acquisition value

Percentage               :5

Save

Acquisition year       :9999

We have given say any year 2008- This rate is applicable for the assets purchased in the year 2008 –Next year also we are purchasing an asset having 5% rate-we have to create acquisition year once again in the next year.

When we give 9999 purchase can be in the year

2.  Years 999

A) 5% SLM rate 20 years (100/5)

B) 5% WDV rate       ?

C) 1% SLM rate 100 years (100/1)

D) 1% WDV rate       ?

999 max no. of year

In base method –once the net book value becomes zero –Do’t calculate depreciation .

In some countries.

First 5 years 5%

Next 5 years 10%

Next 5 years  15%

3. Periods 12 months
4. Base value 01 Acquisition value in case of SLM

        24 Net book value incase of WDV

       5. Percent 5 rate of depreciation

6. Reduction 1

Acquisition vale       100000

1% Scrap value        1000

                                    ------

                                    99000

Dep 5% only on 99000

7. Remine life                       Percentage method             Useful life method

                                                India                                       Machine no.1-In year 2003

                                                                                                Useful life :20 Years

                                                                                                Going for SAP in 2008

                                                                                                Select rem life

                                                                                                Asset master -15 Years

Select acquisition year 9999

Double click on Multi level method folder

Select next entry button

Multilevel method A2

Description    :5% WDV

Validity star   :From ordinary depreciation star date

Save

Select acquisition year 9999

Double click on levels folder

Select new entries button

Acquisition year       :9999

Year                            :999

Periods                      :12

Base value                :Select 24 net book value

Percent                      :5

Save

Maintain period control methods:

Same path

Give the Chart of deprecation :YOUR COMPANY

Enter

Select new entries button

Period method                      :006

Description                :YOUR COMPANY period control method

Acquisition year       :Select 01 pro rate at period start date

Add year                    :Select 01

Retirement year        :01 (Retirement mean sale)

Transfer year            :01

Press enter to save in your request