Change in Useful life of asset in mid year, but the previous posted depreciation should not be changed

[Former Member]

Dear Experts,

I have a requirement in one of my client, We need to extend the useful life of asset in mid of an asset fiscal year and the depreciation which was posted in the previous should not be changed.

Requirement:

Useful life of asset  is to be extended after completing depreciation for 4 years and in-between the current asset fiscal year. Provided the present asset value has to be taken as the new book value of the asset and the depreciation posted henceforth to be posted based on the new asset value till the remaining useful life.

Previously posted depreciation should be unchanged.

Analysis:

1.      The fiscal Year followed - October to September.

2.      The useful life of asset will be changed, and the depreciated value posted till 31/mar 2014 will have the old depreciation value ( based on the original acquisition value)

3.      The Depreciation key used in of type LINR (linear), depreciation value will be calculated based on the Book value till the asset value becomes ZERO at the end of useful life of the asset.

4.      We can change the useful life of the asset at the end of a Asset fiscal year say FY- 2014, if this is done the existing configuration will take the Book value of the asset at the end of the Fiscal as the asset value and the new depreciation will be calculated based on the new useful life of the asset. The asset value will become ZERO at the end of the newly changed Useful Life.

5.      But the requirement is that the useful life of the asset will be changed exactly half way in between existing Asset fiscal (i.e., 31/03/2014), if this is done system will change the depreciation value based on the new useful life ( since the Dep Key is LINR), but the depreciation value will change from the fiscal start say October 2013 to September 2014 ), which will not satisfy the requirement of the client. Since the depreciation which is already posted from October 2013 to March 2014 should not be changed.

Note:

1. We are not willing to retire the asset and create a new asset with the remaining book value as asset value and start depreciation.

Kindly let me know if the requirement can be fulfilled without retiring the asset.

[Former Member · Accepted solution]

Dear All,

This requirement has been completed.

1. I created New Multi level valuation method with base 26 ( Net book value w/o Revaluation ).

2. New depreciation key was created and the above method was assigned to it. I never changed the Base method.

3. new interval was created in the depreciation area, with this created dep key and extended the useful life of the asset. The depreciation was calculated according to the requirement.

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Originally the asset had useful life of  5 Years, I changed the asset useful life to 8 years now with new Depreciation key 2001.

Depreciation was already posted to the asset till 04- 2013 for an amount of 148.27 SAR.

Net Book value carried forward to 2013 = 1575.56 SAR

Depreciation already posted till 4^th period =   148.27 SAR

Current Net book value after useful life extension           = 1427.29 SAR .

Now the new depreciation key 2001 with Multilevel method 201, will take this Net-book value as Asset value and will depreciate along the useful life of the asset till it becomes zero.

Planned depreciation of 2013 ( remaining 6 months) = 166.24 SAR

Planned depreciation of 2014 = 225.96 SAR

Planned depreciation of 2015 = 225.96 SAR

Planned depreciation of 2016 = 225.96 SAR

Planned depreciation of 2017 = 225.96 SAR

Planned depreciation of 2018 = 225.96 SAR

Planned depreciation of 2019 = 131.25 SAR

-----------------

Total      = 1427.29 SAR ( the Asset value becomes zero at the end of its remaining useful life.

The previously posted depreciation from 01.01.2013 to 30.04.2013 was untouched.

[Former Member]

Dear Ajay/Pankaj,

Thanks for your reply.

@ Pankaj- The depreciation posted in previous years will not have impact, The asset already has Dep Key of type BV/Rem Useful life ( LINR), so as soon as i change the Useful life, system will automatically recalculated and post an adjustment entry for the previous 6 months in this current fiscal, we don't want that to be adjusted.

@ Ajay- We thought of the same thing, but creating a new asset and transferring balance or asset retirement is something the client is not ok with.

Can you suggest any other option, I am planning to assign the same depreciation key to the new interval and about to check even is the dep key was same in expired interval and new interval, system is posting a adjustment to previous 6 months or not, will get back if that works.

[ajaycwa1981]

Hi

When you change dep terms, the posted depreciation in previous months wont change

But the delta depreciation for previous months will be posted either in the current month or it will be spread across remaining months

Since you wanted the depreciation to be based on NBV applicable on the date of changing the dep terms, creating a new asset is the option in my opinion

Br. Ajay M

[Former Member]

Dear Ajay,

Thanks , Yes i meant the same, posted value will not get changed but instead a correction entry will be posted.

I will check if i can do something with the interval, if not creating a new asset would be the solution.

Thanks for your prompt replies.

Regards,

M S Lokesh

[Former Member]

Hi Lokesh,

You can create a enhance your depreciation key and use change over method to calculate the depreciation from cutover date as per new requirement.

Thanks,

Deepanshu

[Former Member]

Hi,

According to me when you will change the useful life of Asset in the middle of asset the depreciation will be impacted as the method of depreciation calculation is LINR. Now the depreciation already posted in system wont change but the new propose depreciation values will change. But I think you are fine with it. But before changing the Depreciation key, kindly note that the last fiscal year is closed in asset accounting, else system will show a planned value in the 12th period of last fiscal year with retrospective effect. So kindly close the last fiscal year and then make changes in useful life.

Regards,

Malhar.

[Former Member]

Dear Malwar,

Thanks for your inputs, will take that into consideration.

Regards,

M S Lokesh

[ajaycwa1981]

Hi Lokesh

Option 1

For your requirement, create a new asset and do Asset to Asset Transfer .. In the new asset, maintain the asset useful life as desired

Option 2

Scrap the existing asset.. It will post Loss to a P&L account specified in AO90

Create another asset and post F-90 with Dr to New asset and Cr to the same P&L Account as posted during Scrapping

Maintain asset useful life of your choice

Br. Ajay M

[Former Member]

Lokesh,

I am not sure  what SAP release you are on in ECC 6.0, EHP5 (new dep engine) you can maintain time dependent dep key.

But i think, this can be achieved by doing following:

1. create a new Z Dep key to follow rule: NBV / Rem UL., and assign to assets in question.

Implications:

System will adjust the dep posted in current year based on NBV & Rem UL at start if FY,

No impact of dep posted in previous years.

you need to do thorough testing.

BR

Pankaj Bansal