Revalue Fixed Assets
Revaluation of fixed assets can consist of appreciations, write-downs, or general value adjustments.
When the value of a fixed asset increases, you post a journal line with appreciation to the depreciation book. The new amount is recorded as appreciation according to the fixed asset posting setup.
When the value of a fixed asset decreases, you post a journal line with a lower amount, a write-down, to the depreciation book. The new amount is recorded as a write-down according to the fixed asset posting setup.
Indexation is used to adjust multiple fixed asset values, for example per general price changes. The Index Fixed Assets batch job can be used to change various amounts, such as write-down and appreciation amounts.
To post appreciation from the fixed asset G/L journal
Choose the
icon, enter FA G/L Journals, and then choose the related link.Create an initial journal line and fill in the fields as necessary.
In the FA Posting Type field, select Revaluation.
Choose the Insert FA Bal. Account action. A second journal line is created for the balancing account that is set up for appreciation posting.
Note
Note:
Step 4 only works if you have set up the following: On the FA Posting Group Card page for the posting group of the fixed asset, the Appreciation Account field contains the general ledger debit account and the Appreciation Bal. Account field contains the general ledger account to which you want to post balancing entries for appreciation. For more information, see To set up fixed asset posting groups.Choose the Post action.
To post a write-down from the fixed asset G/L journal
Choose the
icon, enter FA G/L Journals, and then choose the related link.Create an initial journal line, and fill in the fields as necessary.
In the FA Posting Type field, select Write-Down.
Choose the Insert FA Bal. Account action. A second journal line is created for the balancing account that is set up for write-down posting.
Note
Note:
Step 4 only works if you have set up the following: On the FA Posting Group Card page for the posting group of the fixed asset, the Write-Down Account field contains the general ledger credit account and the Write-Down Expense Account field contains the general ledger debit account to which you want to post balancing entries for write-downs. For more information, see To set up fixed asset posting groups.Choose the Post action.
To perform general revaluation of fixed assets
Indexation is used to adjust multiple fixed asset values, for example per general price changes. The Index Fixed Assets batch job can be used to change various amounts, such as write-down and appreciation amounts. The Allow Indexation checkbox on the Depreciation Book page must be selected.
Choose the
icon, enter Index Fixed Assets, and then choose the related link.Fill in the fields as necessary.
Choose the OK button.
Revaluation lines are created per your settings in step 2. The lines are created in either the fixed asset journal or the fixed asset G/L journal, depending on your template and batch setup on the FA Journal Setup page. For more information, see Set Up General Fixed Asset Information.
Choose the
icon, enter FA G/L Journals, and then choose the related link.Select the journal with the fixed assets that you want to revalue, and then choose the Ledger Entries action.
Check the created entries, and then choose the Post action to post the journal.
Tip
If the index figures are for simulation purposes only, you can create a special depreciation book to store them in. Then these entries will not affect any of the other depreciation books.
To post other acquisition costs
You post other acquisition cost for a fixed asset from a purchase invoice or from a fixed asset journal in the same way as you post the original acquisition cost. For more information, see Acquire Fixed Assets.
If depreciation is already calculated for the fixed asset, select the Depr. Acquisition Cost checkbox to have the other acquisition cost less the salvage value depreciated in proportion to the amount by which the previously acquired fixed asset is depreciated. This method ensures that the depreciation period isn't changed.
The depreciation percentage is calculated as:
P = (total depreciation x 100) / depreciable basis
Depreciation amount = (P/100) x (extra acquisition cost - salvage value)
Remember to select the Depr. until FA Posting Date checkbox on the invoice, the fixed asset G/L journal, or the fixed asset journal lines to ensure that depreciation is calculated from the last fixed asset posting date to the posting date of the other acquisition cost.
Example - Posting Other Acquisition Costs
A machine is purchased on August 1, 2000. The acquisition cost is 4,800. The depreciation method is straight-line over four years.
On August 31, 2000, the Calculate Depreciation batch job is run. Depreciation is calculated as:
book value x number of depreciation days / total number of depreciation days = 4800 x 30 / 1440 = 100
On September 15, 2000, an invoice is posted for painting the machine. The invoice amount is 480.
If you selected the Depr. until FA Posting Date checkbox on the invoice before posting, the following calculation is made:
15 days of depreciation (from 09/01/00 to 09/15/00) is calculated as:
book value x number of depreciation days / remaining number of depreciation days = (4800 - 100) x 15 / 1410 = 50
If you selected the Depr. Acquisition Cost checkbox on the invoice before posting, the following calculation is made:
The other acquisition cost is depreciated as ((150 x 100) / 4800) / 100 x 480 = 15
The depreciable basis is now 5280 = (4800 + 480), and the accumulated depreciation is 165 = (100 + 50 + 15), corresponding to 45 days of depreciation of the total acquisition cost. This calculation means that the asset is totally depreciated within the estimated lifetime of four years.
When the Calculate Depreciation batch job is run on 09/30/00, the following calculation is made:
Remaining depreciable life is 3 years, 10 months, and 15 days = 1395 days
Book value is (5280 - 165) = 5115
Depreciation amount for September 2000: 5115 x 15 / 1395 = 55.00
Total of depreciation = 165 + 55 = 220
If you didn't select the Depr. until FA Posting Date checkbox, the asset would lose 15 days of depreciation because the Calculate Depreciation batch job run on 09/30/00 would calculate depreciation from 09/15/00 to 09/30/00. This means that when the Calculate Depreciation batch job is run on 09/30/00, the calculation is as follows:
Remaining life time is 3 years, 10 months, and 15 days = 1395 days
Book value is (4800 + 480 - 100 - 15) = 5165
Depreciation amount for September 2000: 5165 x 15 / 1395 = 55.54
Total of depreciation = 100 + 15 + 55.54 = 170.54
See also
Fixed Assets
Setting Up Fixed Assets
Finance
Getting Ready for Doing Business
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