Configuring Depreciation Formula

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.

Depreciation Methods

Using two default formulas, Down Value Method and Straight Line Method are configured in the SummitAI application, see Configure Depreciation.
GAAP Depreciation
Custom Depreciation

Asset Depreciation Reports

The Asset Depreciation Report provides the Depreciation details based on the pre-configured as well as Custom Depreciation Formula. For Custom Depreciation Formula, Field Mapping and Depreciation Formula should be configured.

The SummitAI application also generates Depreciation Reports based on India-GAAP and US-GAAP. For generating these reports, GAAP Depreciation must be configured in the SummitAI application (see: Configuring GAAP Depreciation). Following are the types of Depreciation Reports based on GAAP:

To configure Depreciation:

To configure Depreciation, the required attributes, such as Asset Cost, Shelf Life, Scrap Value need to be included while configuring Asset Category. These attributes need to be mapped using Depreciation Field Mapping configuration.

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 Method
On 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 Method
Make 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. If selected, the depreciation formula is active. If cleared, the depreciation formula is inactive.
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:

DEPRECIATION page: List of 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.

Custom Scheduler Jobs

Apart from Depreciation Field Mapping and configuring Depreciation Formula, appropriate Custom Scheduler Job needs to be configured for the Depreciation Feature to function correctly. Following is the Custom Scheduler Job for Depreciation and its recommended setting. For more information about Custom Scheduler, see SummitAI Platform Help.

Asset Depreciation Calculation by Company Act: This job calculates the Asset Depreciation. This job should be 
configured on the SummitAI Application Server. It is recommended to schedule this job to run every 30 minutes.

Alps SP1