Example - Posting Additional 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. The program calculates depreciation as:
book value * number of depr. days / remaining number of depr. days
= 4800 * 30 / 1440 = 100.
On September 15, 2000, an invoice is posted for painting the machine. The invoice amount is 480.
If you inserted an "x" in the Depr. until FA Posting Date field on the invoice before posting, the following calculation would be made:
15 days of depreciation (from 09/01/00 to 09/15/00) is calculated as:
book value * number of depr. days / remaining number of depr. days
= (4800-100) * 15 / 1410 = 50
If you inserted an "x" in the Depr. Acquisition Cost field on the invoice before posting, the following calculation would be made:
The additional acquisition cost is depreciated by ((150*100)/4800)/100 * 480 = 15
The depreciable basis is now 5280 = (4800 + 480), and accumulated depreciation is 165 = (100 + 50 + 15) corresponding to 45 days of depreciation of the total acquisition cost. This means that the asset will be 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 used:
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 * 15/1395 = 55.00
Total of depreciation = 165 + 55 = 220
If you did not insert an "x" in the Depr. until FA Posting Date field, 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 * 15/1395 = 55.54
Total of depreciation = 100 + 15 + 55.54 = 170.54