Depreciation

Depreciation

Purpose

Either Tax or Management Depreciation may be calculated dependent upon the setting on the Lease Control Details

Only one Depreciation Calculation can integrate to the General Ledger

Either calculation may be reported from within the Lease Module

Management Depreciation Process

The system automatically calculates and posts on to each Lease Asset Management Depreciation

The depreciation charge is added to the Lease Asset at the time the instalment is posted so there is a correct recognition of the expense at the same time the rental income is earned

The calculation is as follows:

(Cost Item 1 + Cost Item 2 + Cost Item 3)/Number of instalments

This translates to be (Asset Cost Price –GST – Residual Value)/Instalments

On the example lease asset below the calculation would be:

($29,500.00 - $3,847.83 - $2859.95)/36 = $633.12


At the end of each month it is necessary to verify the maintenance posting to the General Ledger

Run the Print Leased Depreciation and Asset Sales Report

For ease of use to prove the journal entries posted to the General Ledger at month end the report should be printed with the following parameters:

Field
Explanation
Report Order
Asset Status
Asset Status
All
Summary Only
Ticket on

The resulting report will provide the details required for the General Ledger month end journal posting

The report can be reprinted in details to understanding the individual amounts per lease account and to verify these are correct

The month end General Ledger journal that is posted is in two parts and is structured as:

1. Post Depreciation Provisions

Process all Lease Assets that:
  1. Are not sold     
  2. AND are not on-leased;
This means all assets that are At Client or Returned to Stock

For each account type, company and currency combination:
  1. Add together the Depreciation Provision and the Prior Lease Depreciation Provision from these lease assets
  2. Post using the GL Codes from the Account Type, setting the new balance to the calculated figure
An example of this system generated journal is:

2. Post Depreciation on Sales

Process all Lease Assets that:
  1. Are Sold   
  2. AND were Sold within the month

For each account type, company and currency combination:
  1. Posts an entry for the depreciation, being the sum of the Depreciation and Prior Depreciation from the assets    
  2. Posts an entry for the sum of the assets Loss On Sale
  3. Posts an entry for the sum of the assets Depreciation Recovered
  4. Posts an entry for the sum of the assets Profit On Sale
  5. Posts a balancing entry being Depreciation Recovered + Profit On Sale - Depreciation - Loss On Sale (the net difference of the above entries)

An example of this system generated journal is:


Taxation Depreciation Process

The system will automatically calculate taxation Depreciation based on the rate and method set up on the Asset Details

These calculated amounts are not shown on the Asset Detail screen, and are NOT posted to the General Ledger

Run the Print Leased Assets Tax Depreciation Report

For ease of use the report should be printed with the following parameters

FieldExplanation
Report OrderAsset Status
Asset StatusAll
Summary OnlyTicket on

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