Setup > Fixed assets > Depreciation methods 

Use this function to:

  • Set up the standard depreciation methods delivered with your software license.
  • Define free depreciation methods, if the standard methods do not answer the company requirements.

The depreciation schedules are determined according to the chosen method. A depreciation method is defined by various parameters: Duration, Rate, Method, etc.

SEEREFERTTO The calculation terms specific to each standard method are described in the annex document.

    Prerequisite

    SEEREFERTTO Refer to documentation Implementation

    Screen management

    The information related to the depreciation methods is spread across three sections.

    • The Main section:

      -Define the calculation rules to apply on a free depreciation method.
      - Restrict the use of a standard method to a given country and/or a given legislation.
      - Specify an equivalent residual method for each of the standard non residual methods.
    • The Options section:
      -Apply certain options for standard methods.
    • The Plans concerned section:
      -Devine the plans for which the method is available. By default, a method is available for all plans.

    Header

    Presentation

    The header is used to specify:

    The company :

    • For a Free depreciation method, you can define a single company. The reference of the company must thus be entered.
      It can also be defined, by default, for all the companies. In this case, no company reference must be entered.
       
    • For a Standard depreciation method, the company reference is not specified, but the standard methods are defined for all the companies.

    Note :
    The maximum number of Free methods is fixed to 400; the control is carried out as follows:

    • When a method is defined by default, it is the sum of the free methods already defined by default and the free methods defined for the company containing the most that is taken into account. If this sum reaches 400, the creation of the new default free method is prohibited.
       
    • When a method is defined for a company, it is the sum of the free methods defined by default and the free methods already defined for this company that is taken into account. If this sum reaches 400, the creation of a new free method is prohibited for this company.

    The depreciation method to be displayed or to be created.

    A method is identified by:

    • Its code. It must be unique and can therefore not be assigned to two different methods. The code for a standard method cannot be modified nor assigned to a free method.
       
    • Its description.

    These pieces of information are mandatory.

    Select the Active check box to activate the depreciation method. The active methods become available and appear in the list of depreciation methods proposed in the asset management. Only the active methods are considered as valid during the entry of the depreciation method for the assets.

     

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    Fields

    The following fields are present on this tab :

    This is the Identification Code of the company for which the depreciation mode is defined. If no specific company code is entered, the mode is defined for every existing company. A Standard depreciation mode is always defined for all the companies.

    • Depreciation method (field DPM)

    This field contains the depreciation mode identifier. The maximum length is eight characters.

    • Description (field DES)

    This field contains the description of the amortization expense method.

    • field MAJDES

    This button, only available on standard modes, is used to synchronize the description of the mode with the title of the 3228 local menu. This button is not available as soon as these titles are equal.

    • Active (field ENAFLG)

    This indicator is used to specify if the mode is active or inactive. Inactive modes are not displayed in the selection windows and cannot be used.

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    Tab Main

    Presentation

    You can set up free methods and determine the depreciation calculation method.
    These are notably the rates, the date management rules and the depreciation rules.

    Most of the information in this section is not accessible for the standard method.
    Only the following can be entered:

    • The fields used to restrict the use of a method to a given country and/or a given legislation.
    • The field used to select the asset date to be used to load the depreciation start date for the assets depreciated according to this depreciation mode: this could be the Purchase date, the First use date or the Posting date.
    • The field that is used for non residual methods to specify the equivalent residual method that will be used in the plans for the IAS/IFRS and CRC2002-10 standards to automatically substitute for the original method:
      - During the modification of at least one of the depreciation setup (change of duration, basis, residual value, etc),
      - During a revaluation using the Market valueor during an impairment loss.

      The introduction of the residual method is used to process these changes in a long term fashion by depreciating the new net value of the asset over the the residual depreciation duration.
      If no residual method is set up, it is the RE - Residual daysmethod that is used.

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    Fields

    The following fields are present on this tab :

    Characteristics

    • Depre method type (field DPRMODTYP)

    A depreciation method can be either Standard or Free.
    Only the Free depreciation methods can be modified. The Standard method parameters cannot be changed, except the following ones: Active, Limited to country, Limited to legislation, Depreciationstart date andResidual equivalent mode.

    • Standard method (field STDDPMNUM)

    This field is filled only when the depreciation method has the Standard type: it displays the description of the selected method.

    This field is available only for a Standard depreciation method. It is used to limit the use of the method to the entered country. When no country is specified, the method can be used for all countries.
    In the management screens, the method list will display only the methods that can be used by the country of the company and also the ones every country can use.
    ..\FCT\SEEINFO If the use of the method is limited to a given legislation, this legislation will also be used as a filter on the list.

    This field is available only for a Standard depreciation method. It is used to limit the use of the method to the assets managed in companies liable to a given legislation. When no legislation is specified, the method can be used for all legislations.
    In the management screens, the method list will display only the methods that can be used by the legislation to which the company is liable and also the ones that can be applied for all legislations.
    ..\FCT\SEEINFOIf the use of the method is limited to a given country, this country will also be used as a filter on the list.

    • Rate application rule (field RATCOETYP)

    This field is used to specify the application mode of the rate:

    • Either Rate by annuity. In this case, the user needs to enter the Number of rates (number of annuities), as well as the Depreciation rate table which contains the rate to apply for each annuity. The number of annuities is limited to 99. The total of the rates should not exceed 100%.
    • Or Basis x or / Constant Rate. In this case, the Constant rate field must be entered.
    • Or Base X monthly rate. In this case, the Number of rates field (number of months), as well as the Depreciation rate table which contains the rate to apply to the base for each month, must be entered. The number of months is limited to 99.
    • Constant rate (field CNSRAT)

    This field is used to specify a value for the constant rate to apply to the depreciation basis.
    This field can only be entered if the Rate Application Rule field has the value Basis x Constant Rate or Basis / Constant Rate.

    • Number of rates (field RATNBR)

    The number of rates can be completed only if the Rate application rule field has the value Rate by annuity or Base x monthly rate.

    • If it is Rate by annuity this field is used to enter the number of FYs over which the depreciation takes place. 1 to 99 annuities can be defined.
    • If a Minimum depreciation duration is completed, the number of annuities cannot be lower than this value.
    • If the rate application terms are based on a monthly rate, this field is used to specify the number of months concerned by the depreciation. 1 to 99 monthly payments can be defined.
    • Once the user entered the number of rates, the entry table of the depreciation rates is updated and contains as many lines as annuities or monthly payments to complete.
    • Rate totals (field RATCUM)

    Calculated value, it cannot be entered. This is the total of the monthly rates or of the rates by annuity entered in the Depreciation rate table.
    If the rate application mode is Rate by annuity and the Depreciation basis type has the value Balance sheet value - residual value or Balance sheet value, the following check is carried out: the sum of the entered rates augmented by the exceptional depreciation rate cannot exceed 100%.

    • Depre start date (field STRDATTYP)

    Enter the date of the financial asset to determine the amortization start date for each amortization method. By default, it is the purchase date.

    This setting us used at the level of the financial asset management:

    • During the entry of the method or its filling by associations.
    • During the modification of the method by Change of the account posting when this changes the first use of the asset.
    • During the modification of the selected date, as long as it can be modified.
    • Residual equivalent method (field RSDDPMTGR)

    This field is used for a non residual method to specify the equivalent residual method.
    This will be automatically substituted for the original method, in plans for the IAS/IFRS or CRC2002-10 standards, during any change influencing the depreciation of an asset : change of method, depreciation, re-evaluation by market value.
    The introduction of the residual method is used to process these changes in a long term fashion, by depreciating the new net value for the asset over the duration of the residual depreciation.

    • If the method is Standard, the residual method cannot be entered: it is loaded with the method itself, if this method has already been calculated based on the net value, or with the RE-Residual value if this method has been calculated based on the gross value. The user can specify the prorata type to apply (days, weeks or months).
      Special features: for the Portuguese standard methods Constantes and Constantes Duodecimos, the residual method can be entered. It may contain the method itself, or the Re-Residual method.
    • If the method is Free, the residual method is loaded by default with the method itself, but remain modifiable and can be filled with the residual method, whether standard or free.
    • Prorata (field PRATYPTGR)

    This field can be modified only when the equivalent Residual method has the RE - Residual value.
    It enables the user to precise the pro rata type to apply (days, weeks or months).

    Grid Depreciation rate

    • Order no. (field NUM)

    This table can be accessed only if the Rate application rule field has the value: Rate by annuity or Basis x monthly rate.
    it contains a number of lines equal to the number of annuity or monthly payment entered and enables the user to enter an amortisation rate for each annuity or monthly payment.

    • Rate (field RAT)

    If the Rate application rule field is set to Rate by annuity or Base x monthly rate, the table contains as many lines as annuities or monthly payments to enter and you can enter a depreciation rate for each of them.
    From the Action icon menu on the line, select Pass to next rates to copy the rate of the selected line to the next line.

    Date management

    • 1st FY calculated for 1yr. (field FIRFIYFLG)

    This indicator must be activated if the acquisition fiscal year must be counted as a full year during the definition of the depreciation end date.
    This information is useful when the asset depreciation start date is later the the fiscal year start date.
    For instance: an asset is acquired on 03/01/2005 and depreciable over a period of 3 years.
    - If the indicator is activated, the depreciation end date will be 12/31/2007.
    - If the indicator is deactivated, the depreciation end date will be 02/29/2008.

    • Calculate on anniversary date (field ANIDATFLG)

    This indicator should be activated if the annuities must be aligned with the anniversary date of the asset acquisition.
    For instance:
    - Depreciation start date: 01/07/2004
    - 1st Annuity rate: 50 %
    - 2nd Annuity rate: 30 %.
    The rate applied for the second semester of 2004 is 50%, the rate applied for the first semester of 2005 is 50% and the rate applied for the second semester of 2005 is 30%.

    This indicator should be deactivated if the annuities must be aligned with the specified fiscal years.

    • Prorata type (field PROTYP)

    This field is used to specify the calculation method of the asset holding duration: in months, days or weeks.
    If the Rate application rule field has the value Basis x monthly rate it cannot be modified as the pro rata type is mandatorily defined in months.

    • Depre start rule (field ETRDATTYP)

    This field enables selecting the rule that will define the depreciation start date.

    • If the Rate application rule is Basis x monthly tax, the depreciation start date will necessarily be From first day of the month or From first day of the next month.
    • In the case of a monthly Type of prorata temporis, the rule used to define the depreciation end date cannot be On the specified day.
    • Depre end rule (field ENDDPRTYP)

    This field enables selecting the rule that will define the depreciation end date.

    • If the Rate application rule is Basis x monthly tax, the depreciation end date will necessarily be From the last day of the current month.
    • In the case of a monthly Type of prorata temporis, the rule used to define the depreciation end date cannot be On the specified day.
    • Disposal date rule (field ENDDATTYP)

    This field enables selecting the rule that will define the issue date.

    • If the Rate application rule is Basis x monthly tax, the issue date will necessarily be From the last day of the previous month or From the last day of the current month.
    • In the case of a monthly Type of prorata temporis, the rule used to define the issue date cannot be On the specified day nor From the previous day.

    Depreciation rules

    • Depreciation basis type (field BASTYP)

    This field enables specifying the amount to be considered as the depreciation basis for calculating depreciations.
    The default calculation basis is Balance Sheet Value – Residual Value.
    If it is a Free mode used as residual mode by another mode, the basis type must be one of the following values: Net Value or Net Value – Residual Value.

    • Distribution rule (field DPRDISRUL)

    Select Period distribution or 1st available period.

    This field is only available and required if the Depre method type is Free.

    Once the asset has been calculated using the selected method, you can no longer change this value.

    Period distribution – If you select this method, the depreciation amount is allocated evenly across all periods in the fiscal year.

    1st available period – If you select this method, the entire depreciation amount is allocated to a single period in the fiscal year regardless of the start date or issue date. It is allocated to the first available or current period. You cannot allocate this amount to a closed period.

    For the Change method actions available for the asset in Fixed assets (GESFAS), the change only applies to the current period when the Distribution rule is 1st available period.

    • Minimum depr duration (field MINDPRLIF)

    This field is used to specify the minimum depreciation duration.
    If the method definition is based on a Rate by annuity, the number of declared rates must be consistent with the minimum duration entered.

    • Minimum value type (field MINDPRTYP)

    The minimum value is the value below which the charge cannot drop. The Minimum value type enables to define the calculation mode for this value.
    If the minimum value type selected is Depreciation basis % or Previous FIY end net value %, it is then necessary to enter a minimum rate in the next field.

    • Minimum rate (field MINDPRRAT)

    Entering a rate (value included between 1 and 100) is mandatory if the Minimum value type selected is based on a percentage application.

    • Ceiling value type (field MAXDPRTYP)

    The ceiling value is the maximum amount which the charge value cannot exceed. The Ceiling value type enables to define the calculation mode for this value.
    If the ceiling value type selected is Depreciation basis % or Previous FIY end net value %, it is then necessary to enter a ceiling rate in the next field.

    • Ceiling rate (field MAXDPRRAT)

    Entering a rate (value included between 1 and 100) is mandatory if the Ceiling value type selected is based on a percentage application.
    If the minimum and ceiling value types are identical, the Ceiling rate must be greater than or equal to the Minimum rate.

    • Exceptional deprec rule (field EXCDPRTYP)

    This field is used to specify the application of a potential exceptional depreciation.
    In this case, the rate to apply to the depreciation basis selected must be entered in the next section.

    • Exc. depr rate (field EXCDPRRAT)

    This field must be filled in with a rate (>0) if the Ex. depre. type requires applying a percentage to determine an exceptional charge.

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    Action icon

    Pass to next rates

    Select this option from the Depreciation Rate table to transfer the selected line rate to the following lines if required.

    It is only available if the number of rates is greater than 1.

     

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    Tab Options

    Presentation

    Calculation options are available for certain standard methods only.

    Austrian Half-year method (AUTLHY) This option calculates the first year's annual depreciation depends on the point in time a fixed asset is bought or put in service. If the asset is activated in the first half of the company's fiscal year (regardless of the exact date), a full annual amount is depreciated. If the asset is activated anytime in the second half of the fiscal year, half of the annual amount is depreciated.

    Belgian standard methods DB (Belgian digressive) and LB (Belgian linear) These options are used to specify the type of pro rata calculation applied.

    French standard method LP (French linear) This option is used to specify whether the rate has priority on the depreciation end date. In that case, the depreciation is extended until the depreciable value is depleted. The end date is re-calculated, to the day, from the cumulative and the depreciation rate. This case generally happens at the end of a depreciation increase with a depreciation accumulation under evaluated. If this option is not specified, the depreciation is stopped in the period containing the depreciation end date.

    German standard method DA (German digressive) This option is used to specify if the simplification rule must be applied. When this option is specified, it is also implicitly applied to the German standard method DX (Mixed German Digressive). This rule is used to automatically set the depreciation start date at the first day of the acquisition semester. If this option is not specified, the depreciation start date corresponds either to the first day of the month specified in the depreciation start date (if the proportion to time is expressed in months), or the first week of the month specified in the depreciation start date (if the proportion to time is expressed in weeks).

    Italian standard method IT (Ordinario / Anticipato) Two options are available and are used to apply a pro rata calculation in days in the acquisition fiscal year and/or the fiscal year of the asset issue.

    These settings only consists in inserting (for the corresponding method) a line corresponding to the type and code of the option. The additional settings cannot be accessed.

     

    Fields

    The following fields are present on this tab :

    Grid Paramtsd options

    • Option type (field OPTTYP)

    Some standard amortization methods can include specific options.
    The available option types are the following:

    • Belgian method option available for the DB - Belgian declining and LB - Belgian linear methods.
    • Italian method option available for the IT- Ordinary / Anticipated.
    • German method option available for the DA - German digressive method. 
      Note: When it is defined, this option is also implicitly applied to the DX- Mixed German digressive method.
    • Linear method option available for the LP - French linear method.
    • Option code (field OPTCOD)

    This field can be filled only if an Option type was selected. You can select the option to apply to the amortization method.
    The available option codes are the following:

    • Without pro rata, Day pro rata and Month pro rata available for the BD - Belgian declining and BL - Belgian linear methods.
    • Pro rata of investment financial year and Pro rata of the disinvestment financial year available for the IT- Ordinary / Anticipated method.
    • Simplification rule available for the GD - German digressive method. 
      Note: When it is selected, this rule is also implicitly applied to the DX- Mixed German digressive method.
    • Priority to the rate available for the LP - French linear method.
    • Option rate (field OPTRAT)

    Field reserved for an option type not available for the moment.

    • Application period start (field STRVLYDAT)

    Field not available presently.

    • Application period end (field ENDVLYDAT)

    Field currently unavailable.

    • Reference date type (field REFDATTYP)

    Field currently unavailable.

    • Depreciation plan (field DPRPLN)

    This field is used to indicate the plan in which the parameterised option is defined. If the mode has been set up for a specific company, the selection is limited to the plans defined for this particular company. If not, the selection covers all of the plans.
    Plan selection is currently unavailable. The standard mode options are set up for all the plans.

     

    Tab Schedules concerned

    Presentation

    You can restrict the use of the method to one or more plans by clearing the corresponding check box.

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    Fields

    The following fields are present on this tab :

    Grid Plan list

    • Depreciation plan (field DPRPLN)

    The code for the depreciation plan.

    • Applicable (field APLFLG)

    By default, the modes can be applied to all the existing depreciation plans, or all the plans managed by the company if the mode is dedicated to a given company, except for the IAS/IFRS plan for which only some specific modes are allowed.
    Disable the plans for which the mode must not be used by clearing the check box on the line.

     

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    Other conditions

     Deletion
    • You cannot delete a standard depreciation method.
       
    • You cannot delete a free depreciation method if:
      - It is used by at least one depreciation plan of an asset.
      - It is used as a residual method of another method.

    Error messages

    In addition to the generic error messages, the following messages can appear during the entry :

    No specific message is listed. See the generic messages.

    Tables used

    SEEREFERTTO Refer to documentation Implementation