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How to fully depreciate an under depreciated asset

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Summary

Steps to fully depreciate an under depreciated asset or accelerate depreciation on an asset.

Resolution

Note: You must use the Manual Method if the asset is using a bonus method, such as MA or SB. The RV method does not allow for a 168k election amount.

There are two ways to adjust an asset that has run out of life but still has Net Book Value, the Calculated Method and the Manual Method:

Calculated Method:

Notes:

  • This method will include the adjusted amount in Depreciation This Run. For this method to work: It is imperative the exact Estimated Life is calculated from the Placed-in-Service Date to the Beginning date plus the desired Remaining Life on each asset. Use the RVEstLifeCalculator.xlsx to ensure you have the correct Estimated Life
  • Before changing values, make sure the Current Through Date on the asset is at least one period prior to the date you want to fully depreciate the asset by. If it is not, depreciate the asset to the prior period first. See How to run depreciation on a specific asset
  • If there are multiple assets with the same Placed-in-Service month, you may use the Bulk Edit feature to change the Estimated Life and Deprecation method. See How to perform Bulk Edit of Critical Depreciation Fields

On an asset-by-asset basis, change the Method and Life on the asset:

  1. Change the Depreciation Method to RV (Remaining Value over Remaining Life).
  2. Answer Yes, Current Thru Date to the questions.
  3. Change the Estimated Life to be the time period from the Placed-in-Service Date of the asset to the Beginning date plus the desired Remaining Life for the asset to fully depreciate over.
  4. Answer Yes, Current Thru Date to the questions.
Example:
  • Placed-in-Service Date: 01/01/2018
  • Estimated Life: 3 Years
  • Beginning Date is 06/2022 after changing to the RV method
  • Desired End Date 07/2022
  • To make this asset end on 07/2022, change the Life to 0407 (4 years 7 months). Notice the extra month (Placed-in Service date through the Beginning Date plus one month) included in the final Estimated Life


Manual Method:

Notes:

  • This method will NOT show the adjusted amount in Depreciation This Run. Adjust the General Ledger manually
  • This method will force the Current Accumulated Depreciation and the Current YTD. It will also fully depreciate the asset(s)

On an asset-by-asset basis, populate (re-populate, or change) the Beginning fields:

  1. Beginning Date: Date desired to show item as fully depreciated. This could be the current period or any other date.
  2. Beginning YTD: Current Net Book Value + Current YTD (if any). This is to ensure the Prior Accum amount remains correct after the change.
  3. Beginning Accum: The full Acquisition Value of the asset.


For assistance in calculating the Estimated Life, see the document linked below:

RVEstLifeCalculator.xlsx

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