Set up pooled asset depreciation
Pooled assets are assets that have multiple acquisitions after amortization has commenced and all the acquisitions in the pool have the same depreciation end date. The following list includes examples of pooled assets:
Buildings with additions built after the initial construction, but the addition is considered as part of the initial asset. The desire is to depreciate the addition so that the addition is fully depreciated at the same time as the original asset.
Leasehold improvements. By definition the end date would be the same for all acquisitions regardless of the acquisition date.
Assets that are pooled by year of acquisition and do not have separate asset cards for each acquisition. Typically, furniture, equipment, and similar fixed assets would fall into this category.
At times, it is desired that the fixed asset system depreciates additions made to book value based on when the addition was made versus always using the asset’s depreciation start date. In a non-pooled asset, the system catches up the depreciation for any additions that are made after the start of depreciation using the asset’s depreciation start date.
By using pooling, the system considers all additions to book value for the acquisition month as a separate pool, to be depreciated from the first of that month to the depreciation end date. Alternatively, if use half-year convention is enabled, the system considers all additions to book value for the fiscal year as a single pool as if they were purchased at the mid-point of the fiscal year, to be depreciated from the fiscal year mid-point to the depreciation end date.
Set up fixed asset pooling
To use the Sparkrock 365 fixed asset pooling functionality, you must perform some setup.
The following list includes fixed asset pooling setup considerations:
After depreciation entries have been posted to an asset, the fixed asset pooling functionality cannot be turned on or off.
Asset pooling works for both integrated and non-integrated depreciation books.
To indicate that a new fixed asset is to be depreciated on a pooled basis
Choose
, enter fixed assets, and then choose the related link.The Fixed Assets page opens.
Select the fixed asset for which you want to indicate that depreciation is to occur on a pooled basis, and then on the action bar, choose Manage > Edit.
The Fixed Asset Card page opens.
On the General FastTab, turn on Pooled Asset.
The value of this field can be defaulted in from the selection of a fixed asset subclass code, using the field Pooled.
Fixed asset pooling example
The following is an example of content that appears on the FA Ledger Entries page for a pooled asset where two acquisition entries were posted in the fiscal year in different months and depreciation was run for the entire fiscal year:
| FA Posting Date | Document No. | FA Posting Type | Description | Amount | No. of Depreciation Days | FA Tracking ID |
|---|---|---|---|---|---|---|
| 10/15/2016 | INITIAL PURCHASE | Acquisition Cost | Initial Purchase | 5,000.00 | 0 | {7667d8ae-bf0a-484a-9cc7-d51333f0fd4c} |
| 1/15/2017 | ADDED COST | Acquisition Cost | Additional Costs | 2,000.00 | 0 | {a7efa0b3-c04d-45e4-b3cc-177b222dbbf4} |
| 8/31/2017 | 083117 | Depreciation | Based on BV of 5,000 & Days Left of 3,570 | -462.18 | 330 | {7a67d8ae-bf0a-484a-9cc7-d51333f0fd4c} |
| 8/31/2017 | 083117 | Depreciation | Based on BV of 2,000 & Days Left of 3,480 | -137.93 | 240 | {a7efa0b3-c04d-45e4-b3cc-177b222dbbf4} |
By default, the Sparkrock 365 uses 30-day months (360-day fiscal years) to make sure each month and year receives a consistent amount of depreciation. In this example, the asset is not set to use the half-year convention. Also, the fiscal year ends at 8/31.
The 10/15/16 acquisition is considered to be made at 10/1/16, which is one month after the start of the fiscal year. Thus, Sparkrock 365 depreciates the acquisition layer for 330 days of the fiscal year as follows:
$5,000 x (330 / 3,570 days left until 8/31/26) = $462.18
3,570 days left makes sense for a 10-year asset (10 x 360) less 30 (1 x 30) days.
The 1/15/17 acquisition is considered to be made at 1/1/17, which is four months after the start of the fiscal year. Thus, Sparkrock 365 depreciates the acquisition layer for 240 days of the fiscal year as follows:
$2,000 x (240 / 3,480 days left until 8/31/26) = $137.93
3,480 days left makes sense for a 10-year asset (10 x 360) less 120 (4 x 30) days.
Note
Note:
Use the Description and No. of Depreciation Days to better understand how the depreciation was computed. The FA Tracking ID field is used to connect the depreciation entries back to the acquisition pools to which they relate. Sparkrock 365 uses a GUID value to make the connection because GUIDs are always unique. By filtering on one FA Tracking ID, you can easily view one pool.
If the same asset is depreciated for the next fiscal year, Sparkrock 365 calculates the depreciation as follows:
| FA Posting Date | Document No. | FA Posting Type | Description | Amount | No. of Depreciation Days | FA Tracking ID |
|---|---|---|---|---|---|---|
| 10/15/2016 | INITIAL PURCHASE | Acquisition Cost | Initial Purchase | 5,000.00 | 0 | {7667d8ae-bf0a-484a-9cc7-d51333f0fd4c} |
| 1/15/2017 | ADDED COST | Acquisition Cost | Additional Costs | 2,000.00 | 0 | {a7efa0b3-c04d-45e4-b3cc-177b222dbbf4} |
| 8/31/2017 | 083117 | Depreciation | Based on BV of 5,000 & Days Left of 3,570 | -462.18 | 330 | {7a67d8ae-bf0a-484a-9cc7-d51333f0fd4c} |
| 8/31/2017 | 083117 | Depreciation | Based on BV of 2,000 & Days Left of 3,480 | -137.93 | 240 | {a7efa0b3-c04d-45e4-b3cc-177b222dbbf4} |
| 8/31/2018 | 083118 | Depreciation | Based on BV of 4,537.82 & Days Left of 3,240 | -504.20 | 360 | {7a67d8ae-bf0a-484a-9cc7-d51333f0fd4c} |
| 8/31/2018 | 083118 | Depreciation | Based on BV of 1,862.07 & Days Left of 3,240 | -206.90 | 360 | {a7efa0b3-c04d-45e4-b3cc-177b222dbbf4} |
Notice how the formula uses the adjusted book value. An example for the $5,000 layer is:
$5,000 - $462.18 (previous depreciation) x (360 / 3,240 days left until 8/31/26) = $504.20
If the same asset with the same acquisitions is set to use the half-year convention, the first two fiscal years would look as follows:
| FA Posting Date | Document No. | FA Posting Type | Description | Amount | No. of Depreciation Days | FA Tracking ID |
|---|---|---|---|---|---|---|
| 10/15/2016 | INITIAL PURCHASE | Acquisition Cost | Initial Purchase | 5,000.00 | 0 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
| 1/15/2017 | ADDED COST | Acquisition Cost | Additional Costs | 2,000.00 | 0 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
| 8/31/2017 | 083117 | Depreciation | Based on BV of 7,000 & Days Left of 3,420 | -368.42 | 180 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
| 8/31/2018 | 083118 | Depreciation | Based on BV of 6,631.58 & Days Left of 3,240 | -736.84 | 360 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
In this case, Sparkrock 365 considers both acquisitions as one pool. This determination is caused by the fact that with the half-year convention, Sparkrock 365 considered both purchases to be made at the mid-point of the fiscal year, in this case as of 3/1/17. Sparkrock 365 then depreciated the pool for 180 days, which is 1/2 of the fiscal year. The days left is computed as 3,600 – 180. The next year pattern is the same as described above.
Now, let’s add some more acquisition costs in fiscal year 2019 (in Oct. of 2018) and depreciate the asset for 2019:
| FA Posting Date | Document No. | FA Posting Type | Description | Amount | No. of Depreciation Days | FA Tracking ID |
|---|---|---|---|---|---|---|
| 10/15/2016 | INITIAL PURCHASE | Acquisition Cost | Initial Purchase | 5,000.00 | 0 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
| 1/15/2017 | ADDED COST | Acquisition Cost | Additional Costs | 2,000.00 | 0 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
| 8/31/2017 | 083117 | Depreciation | Based on BV of 7,000 & Days Left of 3,420 | -368.42 | 180 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
| 8/31/2018 | 083118 | Depreciation | Based on BV of 6,631.58 & Days Left of 3,240 | -736.84 | 360 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
| 10/15/2018 | ADDED NEW PUMP | Acquisition Cost | Added new pump | 1,000.00 | 0 | {3d1c62e3-0e55-4236-9b66-a121656c7cca} |
| 8/31/2019 | 083119 | Depreciation | Based on BV of 5,894.74 & Days Left of 2,880 | -736.84 | 360 | {dd41fd8a-be99-4ff7-8aee-d8f59d783e2e} |
| 8/31/2019 | 083119 | Depreciation | Based on BV of 1,000 & Days Left of 2,700 | -66.67 | 180 | {3d1c62e3-0e55-4236-9b66-a121656c7cca} |
Notice that Sparkrock 365 creates a pool because the additional costs occurred in the next fiscal year. Also, note that the new acquisition is depreciated for a half-year even though the asset has been depreciated in previous fiscal years.
Note
Note:
After a pool starts to be depreciated and acquisition costs are added to the same period, Sparkrock 365 recognizes that a new pool must be created so that the additional costs are depreciated correctly. Appreciation and write-down entries are prorated to all pools based on current book value.
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