Depreciation is how the costs of tangible and intangible Assets are allocated over time and use. Most of the organizations use depreciation methods according to Generally Accepted Accounting Principles, or GAAP, to expense their Assets. Important details must be known before calculating an Asset's depreciation, including the Asset's total cost, the length of time the Asset will be in use and the Asset's salvage value -- the amount the Asset can be sold or transferred for after its usage period has ended. The cost of the Fixed Asset comes out of the cash account of the organization and is entered as an Asset for the organization. At the end of each period of the useful life of the Asset, a part of the cost is expensed. This amount is added to the accumulated depreciation for the Asset. The net value of the Asset on the books of the organization is the Asset Account minus the accumulated Depreciation Account. Two default formulas, Down Value Method and Straight Line Method are configured in the SUMMIT application.
To configure depreciation:
Select Asset > Configuration > Depreciation > Depreciation Formula.
On the DEPRECIATION page, click the Down Value Method to view and modify the formula set for the Down Value Method. For more information about the fields on the DEPRECIATION FORMULA page, see Field Description.
Figure: DEPRECIATION FORMULA page: Down Value MethodOn the DEPRECIATION page, click the Straight Line Method to view and modify the formula set for the Straight Line Method. For more information about the fields on the DEPRECIATION FORMULA page, see Field Description.
Figure: DEPRECIATION FORMULA page: Straight Line MethodMake the required changes and click SUBMIT.
Field Description
The following table describes the fields on the DEPRECIATION FORMULA page:
Field | Description |
|---|---|
DETAILS | |
Depreciation Method | Displays the selected Depreciation Method. |
Formula | Displays the formula for the selected method. |
Type | Lists the types of depreciation supported in the application. Select the depreciation type from the list. |
Default Formula | Select this check box to set the selected depreciation formula as the default formula. |
Active | Indicates the status set for a depreciation formula.
|
Depreciation Method - Straight Line Method or Depreciation Method - Down Value Method | |
Name | Displays the name of the Asset attribute. |
Description | Displays the mandatory elements that are required to calculate the depreciation value for an Asset. |
Type | Displays the description text for the mandatory value. |
Value | Displays values for the mandatory elements. |
Active | Indicates the status set for a formula. If selected, the depreciation method is active. If not selected, the depreciation method is inactive. |
ACTIONS
This section explains all the icons displayed on the ACTIONS panel of the DEPRECIATION FORMULA page:
SHOW LIST
Click SHOW LIST to display the LIST table showing the depreciation methods:
Figure: DEPRECIATION page: List of depreciation methods
- To update a depreciation value, click the configured Depreciation Method. Make appropriate changes and click SUBMIT.
To display the inactive depreciation values, click the Include Inactive check box.
Note:
When the depreciation values are displayed under the LIST table, the ADD NEW action is displayed on the ACTIONS panel. Click ADD NEW to configure a Custom Depreciation Method. For more information about configuring Custom Depreciation Method, see Configuring Custom Depreciation.