Derived Depreciation

[Former Member]

Can any one explain me brifly what is derived depreciation Please ?

I will assign good points.

Thanks in Advance.

Kumar.D

[Former Member]

hi

Derived Depreciation Areas

Use

The "Derived Depreciation Areas" component makes it possible to determine new asset values based on asset values that have already been determined. The derived depreciation area uses mathematical formulas to determine values based on values in ‘real’ areas, such as the difference between depreciation in two depreciation areas. The system then manages these new values in the derived depreciation area.

Derived depreciation areas function the same as real areas in regard to reporting and value field display. You can also post the values of the derived areas to Financial Accounting.

Features

You define the formula for the derived depreciation area in FI-AA Customizing (Define depreciation areas). In the formula for a derived area, you can use up to four real areas. The arithmetic operations allowed are addition and subtraction. It is possible to mix the calculation rules. This includes using proportional values from real areas in the calculation.

When defining the formula, it is up to you to make sure it is reasonable. Make sure that the key of the derived area is larger than the keys of the real areas it is based on. A derived area "03" can be derived from the real areas "01" and "02" but not from areas "04" and "05."

You can also specify that the derived depreciation area is only for reporting. The system then does not subject the area to value checks (such as the check for positive/negative net book value).

When defining a derived depreciation area, keep in mind that the rules for remaining book value rule in the derived depreciation area can affect the depreciation in the real areas from which it is derived (see Characteristics of a Depreciation Area). Enter a modification area in order to specify which of the real areas this should be.

Be careful when using derived depreciation areas for group assets. In the formula for derived depreciation areas that are for group assets, you can only use depreciation areas that are also intended for group assets (see Group Assets).

nagesh

[Former Member]

As the name suggest the DERIVED depreciation area derives it values from other `REAL` depreciation areas like Book Depreciation, Tax Depreciation etc.

One can use upto 4 real areas to arrive at the value of this Derived area. Further the arithmetic operations allowed are either `addition` and `subtraction`.

Also one must ensure that the derived area key is greater than the other keys in question. E.g. if your derived area is say the difference between 01 Book Area and 02 Tax Area the your Derived Area Key has to be 03 or upwards. This means that a derived area 03 cannot derive its value from 20 Cost Accounting and 51 Investment Support.

It is an independent area by itself and has its own depreciation key. They also have the same functions like the real areas in terms of reporting and value field display.

Hope this clarifies your doubt and earns me good reward points.

Good luck