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There are still Net book Value even after expired Useful Life which needs to be written off

Former Member
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Hi All,

At the end of the last useful life all the net book value should be written off. In a 4 years of useful life example of 1000TL acquisition value, 1st year end depreciation expense will be 500, 2nd year will be 250, 3rd year will be 125, 4th and last year will be 125 as well.

For this, we are using a Double decling method and the configuration as Z follows:-

Base method is 0007

Multi-level method has been defined with only 1 Phase. ( Acq year 9999 ; Year 999; Period 12; Base value 24)

Period Control :- from starting of the Year(06)

Declining method:- 2.00X/ 0.00% /0.00%

Change Over Method:- No automatic Changeover

Multiple Shift :- increase in dep and exp useful life

Scrap Value:- Consideration is controlled bu Cutoffkey Key

We get, 1st year end depreciation expense as  500, 2nd year will be 250, 3rd year will be 125, But in the Last year, we get the dep exp amount as 62.5 But,what we want is that the last year depreciation should be equal to NBV of the last palnned useful life ie., 125/- and the NBV should become zero at the end of the useful life.

Can some one Guide as how this can be achieved.

Thanks,

Namrata 

Accepted Solutions (0)

Answers (3)

Answers (3)

pankaj_pandey2
Active Contributor
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Hi Namrata,

Check note 2052506, which describes the new changes in depreciation behaviour.

it will resolve your issue, as you will define Counrty specific depreciaiton base method.

Regards

Pankaj Pandey

raymond_moynihan
Contributor
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Hello Pankaj,

In relation to this issue:

Indicator: Calculate percentage from remaining useful life
==========================================================
Set this indicator, if you want the system to determine
the periodic depreciation percentage based on the remaining
life. This indicator only makes sense for depreciation keys
in which the base method uses the "percentage from the useful
life" depreciation calculation method.

You should be aware that when you calculate depreciation over
the total useful life, the system rounds depreciation if you
have set up rounding in the depreciation area and the base
value is the acquisition value. This rounding is necessary
in order to reach a net book value of zero.

Example
The straight-line method of depreciation can be used over the
total useful life of the asset, or over the remaining useful life.
In the first case, the acquisition value or the replacement value
serves as the base value for depreciation calculation. In the
second case the net book value is the base value. The difference
between the two methods is seen in the treatment of subsequent
acquisitions and post-capitalization.

thanks and regards

Ray

Former Member
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Hi,

I think the standard is behaving correctly. If you want that system should complete the asset and write off the asset completely then you can use the functionality of Unplanned Depreciation. And post an unplanned depreciation of 62.5 in your case and by this the NBV would be '0'. Also in case of WDV method of calculating depreciation, NBV can never be '0'.

Regards,

Malhar.

NathanGenez
Active Contributor
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This is correct.  Your base value multiplied by a percent will always result in a diminished amount.  500 in the first year, then a lower amount of 250, then a lower amount of 125, then an even lower amount.  It will continue this way until infiniti.