User Defined Depreciation
The User Defined Depreciation screen can be accessed from the User Defined Depreciation screen by moving the cursor over a Method and selecting Edit from the pop-up menu.
The User Defined Depreciation screen allows you to add a new depreciation schedule or edit an existing depreciation schedule. Up to fifty different user defined methods can be set up. Each schedule can span up to 40 years, be declining balance or straight line and have its own purchase and disposal convention.
The following is a description of the fields that appear on the User Defined Depreciation screen:
| Field | Description |
|---|---|
| Depreciation Method | The code used to represent the depreciation method (a valid code is a number between 40 and 89). |
| Life | The number of years to depreciate the asset. |
| Method Type |
The method type used to calculate the depreciation on a fixed asset. Straight Line: Takes the Depreciation Basis Declining Balance: A percentage calculates the yearly depreciation amount that is depreciated over a year. Each year starts over with the percentage applied against the amount not yet depreciated in prior years. Note: The system has a hard-coded depreciation threshold of $2.00, at which point the system automatically switches to a Straight Line depreciation method, regardless of whether the code assigned to the unit is supposed to be Declining Balance. |
| Purchase Convention -Days | Anything entered as a fixed asset on or before the purchase convention day is depreciated by the factor for the month entered. Anything purchased or put into fixed assets after the convention day will be depreciated at the factor of the following month (e.g. not depreciated in the month added). |
| Disposal Convention - Days | Anything sold before the disposal convention day will not be depreciated in that month. Anything sold on or after the disposal convention day will be depreciated in the month of disposal and at the regular monthly rate multiplied by the factor on the line below the disposal day. |
| Disposal Convention - Factor | The factor used for the current month if the asset is sold prior to the days specified in the Purchase Convention - Days and the Disposal Convention - Days fields. |
The following is a description of the fields that appear in the Factor for Purchase Fiscal Month table:
| Field | Description |
|---|---|
| Year | The row is the fiscal year. |
| Month | The columns are the months within the associated fiscal year. |
The factor table works as follows:
In the first row the amounts are prorated since the amount of depreciation for the remainder of the fiscal year is reduced proportionately for each month already passed in the fiscal year.
The basic formula for the monthly depreciation at VitalEdge is:
Total Depreciable Amount divided by the number of years of depreciation, called the Yearly Depreciation amount. In percentages for a five year this would be 20% per year. Figures are entered as percents with two decimals .2000 is 20%.
The yearly amount is then converted to the monthly amount as follows:
Yearly amount - YTD depreciation already taken divided by the number of months remaining in the year.
The yearly amount is reduced (prorated) in the first year that an asset is added by corresponding month the asset is entered. For example each column is one twelfth of a year less than the previous month. An asset entered in the second month would take only 11/12 of the yearly amount and in the sixth month would take 7/12 as the amount for the rest of the year.
Each column in the table must add to 10000 or 100 percent.
The following buttons allow you to complete your work on the User Defined Depreciation screen:
| Button | Function |
|---|---|
| Save | Saves changes made on the User Defined Depreciation screen. |
| Close | Closes the User Defined Depreciation screen without saving and returns to the User Defined Depreciation screen. |