[Karl Arensdorf]

We have a few assets which were originally placed in service with a 5 or 7 year useful life. We now have determined that the useful life should be 10 years for these assets and we want to make a change prospectively (not retroactively). When we attempt to change the remaining life of the assets, the depreciation calculates based on a straight line of the new full term of depreciable life.  What we want it to do is to take the remaining Net Book Value and spread that over the remaining periods. How can we get Dynamics to do this?

Here is a simplified example:

The asset’s acquisition cost is $10,000 and we have depreciated 12 months of the original 60 month term. Today, the NBV is $8,000 and we would like to alter our future depreciation schedule to spread the remaining $8,000 over 108 months. When we try altering the Service life, Depreciation Periods, and Depreciation Periods Remaining, instead of taking the NBV of $8,000 and depreciating over the remaining 108 months, the system is recalculating depreciation based upon the original acquisition value of $10,000. We want our monthly depreciation to be $74.07/mo and instead it is coming out to be $83.33/mo (in this example). We can manipulate the remaining life to solve for the depreciation we want to take each month but doing this means entering misleading/false remaining life information into the system which I don’t really like doing. Also, I fear that doing this will cause us to end up over depreciating the assets if the system doesn’t stop it automatically when the NBV hits $0. 

I will admit that we have not spent a lot of time reading up on this but I am hoping someone else has run into this issue and has figured out a way to make the system work as we wish. 

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Karl Arensdorf
Corporate Controller
Mansfield Oil Company
Gainesville GA
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[Zvika Rimalt]

What is the depreciation method you are currently using?

If your method is “Straight Line Life Remaining” the depreciation should behave exactly like you describe (the monthly depreciation will be calculated by dividing net book value by remaining periods).

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Zvika Rimalt
Functional Consultant
Vancouver BC
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[Karl Arensdorf]

The method we are using is just Straight Line and it looks like we cannot change to Straight Line Life Remaining. We obviously did not anticipate making a change like this when we initially acquired the assets. Any suggestions?

 

——Original Message——

What is the depreciation method you are currently using?

If your method is “Straight Line Life Remaining” the depreciation should behave exactly like you describe (the monthly depreciation will be calculated by dividing net book value by remaining periods).

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Zvika Rimalt
Functional Consultant
Vancouver BC
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[Zvika Rimalt]

The scenario you describe is one of the main reasons to set up straight line depreciation method for SLLR and not SLSL.
It is also helpful when there are additional acquisitions that increase the value of the asset.

I think your only choice is to create new fixed assets with the correct depreciation methods, and transfer the NBR from the old one (scrapping it) into the new one.

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Zvika Rimalt
Functional Consultant
Vancouver BC
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[Karl Arensdorf]

That was where I was leaning too Zvika. Thank you for your assistance.

 

Karl

 

——Original Message——

The scenario you describe is one of the main reasons to set up straight line depreciation method for SLLR and not SLSL.
It is also helpful when there are additional acquisitions that increase the value of the asset.

I think your only choice is to create new fixed assets with the correct depreciation methods, and transfer the NBR from the old one (scrapping it) into the new one.

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Zvika Rimalt
Functional Consultant
Vancouver BC
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[Brad Bertchie]

Karl;

You may want to consider creating a new book with the depreciation method and remaining service live and adjusted basis to depreciate.

Once you create the book – attach to the assets
Acquire the assets under the new book
Turn off “calculate depreciation” on the old book
Go forward with the depreciation proposal on the new book.

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Brad Bertchie
Western Computer
Oxnard CA
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[Zvika Rimalt]

Brad, 
I think that if you simply create a new book and acquire it, without disposal of the original book, you will end up having double recording of the asset value.

but I like the generally like the idea – instead of creating a new asset, simply create a new book and attach to the existing asset

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Zvika Rimalt
Functional Consultant
Vancouver BC
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[Brad Bertchie]

Zvika;

Correct, I should have put that in there – reverse the GL entry that is made to prevent the double booking.

So balance sheet remains unchanged and deprecation is calculated using the new scenario going foward.

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Brad Bertchie
Senior Consultant
Western Computer
Oxnard CA
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